ATTORNEYS  Al  LAW, 
^    PLACERVILLE   ^ 


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OF 

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OF  CALIFORNIA 

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A  TRUSTEE'S  HANDBOOK. 


TRUSTEE'S  HANDBOOK. 


BY 


AUGUSTUS   PEABODY  LORING, 

A.B.,    LL.B.,    HAHV. 
OF    THK    SUFFOLK    BAR. 


Second  Edition. 


BOSTON: 
LITTLE,   BROWN,    AND  COMPANY. 

1900. 


iSoo 

Copyright,  1898,   1900, 
By  Augustus  P.  Lorino. 

All  rights  reserved. 


Sanibersttg  ^ress: 
John  Wilson  and  Son,  Cambkidgk,  U.S.A. 


PREFACE  TO  SECOND   EDITION. 


I  HAVE  taken  advantage  of  the  opportunity  afforded 
by  the  printing  of  a  second  edition  of  the  Trustee's 
Handbook  to  rewrite  the  subjects  of  a  trustee's  power 
to  contract  and  his  liability  in  contracts  (pp.  65  and 
120),  and  decrees  of  distribution  (p.  118),  and  to 
correct  an  error  on  p.  34. 

I  have  also  made  many  short  and  some  important 
additions  to  the  text  and  notes,  and  have  cited  118 
of  the  more  important  of  the  cases  decided  since  the 
publication  of  the  first  edition. 

Augustus  Peabody  Loring. 


687419 


PREFACE   TO   FIRST   EDITION. 


This  little  book  is  meant  to  state,  simply  and  con- 
cisely, the  rules  which  govern  the  management  of 
tnist  estates,  and  the  relationship  existing  between 
the  trustee  and  beneficiary. 

The  lack  of  a  Handbook  of  this  kind  has  led  me  to 
complete  and  publish  what  were  originally  notes  for 
personal  use  merely. 

As  the  book  is  for  general  as  well  as  professional 
readers,  the  citations  are  illustrative,  with  an  ap- 
proach to  completeness  only  where  the  law  is  doubt- 
ful or  conflicting.  But  pains  has  been  taken  to  notice 
the  peculiarities  of  local  State  law,  especially  where 
dependent  on  statute. 

I  wish  to  acknowledge  my  obligation  to  the  writers 
of  the  many  admirable  text  books  which  bear  on  my 
subject,  all  of  which  I  have  used  freely,  and  to  which 
I  have  referred  often  for  a  fuller  discussion  of  prin- 
ciples and  a  more  complete  citation  of  authorities ; 
and  I  have  to  thank  Mr.  Edward  A.  Howes,  Jr.,  for 
his  valuable  assistance  in  digesting  cases  and  passing 
this  volume  through  the  press. 

AUGUSTUS  PEABODY  LORING. 


NOTE. 

The  citations  of  the  following  text  books  are  thus 
abbreviated :  — 

Ijcwin  on  Trusts,  9th  Eng.  ed.,  is  cited  as  "  Lewin." 
Perry  on  Trusts,  4th  Amer.  ed.,  2  vols.,  is  cited  as  "Perry." 
Underbill  on  Trusts  and  Trustees,  Amer.  ed.  Wislizenus,  is 
cited  as  "  Underbill." 

Flint,  Trusts  and  Trustees,  is  cited  as  "  Flint." 


CONTENTS. 


Table  of  Cases six 

PART    I. 

THE  TRUSTEE  AS  AN  INDIVIDUAL. 

Paou 
I.  The  Office  of  Tbcsteb  is  not  always  Dbsibable  .    1-2 
Because  he 

Cannot  come  in  competition  with  trust  estate     ....      1 

Cannot  delegate  the  management 1 

Cannot  render  expert  services  freely 1 

Is  restricted  in  his  dealings  with  the  beneficiary      ...      2 
His  only  reward  —  compensation 2 

II.  Disclaimer 2-4 

Acceptance  necessary ;  may  disclaim 2 

But  dry  trust  may  vest  in  representatives  of  sole  trustee .  2 

No  special  form  of  disclaimer  is  necessary 3 

It  should  be  affirmative  and  decided 3 

By  deed.    In  Probate  Court  when  instrument  is  a  will    .  3 

Must  disclaim  whole  trust 3 

May  disclaim  executorship  or  trusteeship 3 

Exceptions 3 

May  disclaim  one  of  two  separate  trusts 4 

Effect  of  disclaimer 4 

Vests  title  in  other  trustees 4 

Joint  power  lost  by 4 

HL  Acceptance 4-6 

Should  be  formal 4 

What  is  construed  as  an  acceptance 5 

Presenting  will  , 5 

Doing  any  act  to  execute  trust 5 

Not  disclaiming  in  reasonable  time 6 


yiii  CONTENTS. 

Paces 

IV.  Appointment 6-11 

No  trust  fails  for  waut  of  a  trustee 6 

Temporary  trustee  may  be  appointed 6 

Appointment  under  terms  of  trust  instrument 6-7 

How  THE  Trustee  is  Appointed 6-7 

Must  be  ratified  by  court  when 7 

Court  will  appoint  when  there  is  no  adequate  provision  in 

the  instrument 7 

when  donee  of  power  does  not  act     .     .      7 

What  court  will  have  jurisdiction 8-9 

Appointment  not  complete  without  title  to  property  ...      9 

May  vest  by  terms  of  trust  instrument 9 

May  vest  in  new  trustee  by  statute 10 

Decree  may  order  conveyances 10 

Appointees  of  court  must  give  bond 10 

Without  sureties  when 10-11 

Amount  required 11 

V.  Who  is  Trustee 11-12 

Any  person  intermeddling  with  trust  property  ....  11 
An  executor  investing  and  performing  duties  of  trustee  .  12 
Where  a  second  set  of  trustees  appointed  under  power  .    .     12 

"VI.  "Who  can  be  a  Trustee 13-15 

Any  person  of  legal  capacity  to  hold  property  and  exercise 

power 13 

Such  person  may  be  a  corporation 13 

Wto  cannot  be  a  trustee 13 

XiUnatic  and  infant  may  be 13 

Trustee  nhould  be  "  capable  "  and  "  fit " 13-14 

Bankrupt,  bad  character,  or  beneficiary  unfit    ....     1 4 
Relationship  objectionable '.    .     .     .    14-15 

VIL  Appointment  of  Trustee 15 

Maker  may  choose  whom  he  will 15 

Donee  of  power  must  choose  honestly  and  reasonably    .    .     15 

Courts  will  only  appoint  proper  persons 15-lG 

Or  such  person  as  all  agree  on 15 

Public  trustees  in  Colorado 16 

Vm.  Devestment  of  Office 16-17 

By  extinguishment  of  trust  or  completion  of  duties  ...     16 

"By  death  or  disability  office  vests  in  survivors 1 " 

If  sole  tmstee  dies  or  is  removed,  office  vests  in  successor  .    1 7 


CONTENTS.  IX 

Paoxs 

Cannot  abandon  tmst 17 

Resignation 17-18 

Must  be  accepted  either  by  all  interested 17 

Who  are  interested  for  this  purpose 17 

Or  by  court.     What  court 17 

Where  there  is  more  than  ou«  trust  in  same  instrnment, 

must  resign  both  unless  devisable 18 

Removal 19-21 

Matter  is  addressed  to  discretion  of  court 19 

Probate  Court  has  statutory  jurisdiction     ....  1 9 

Any  court  of  equity  in  absence  of  statute  ....  19 

All  interested  in  trust  are  parties 19 

Removed  for 

Waste  and  mismanagement 19-21 

Wilful  breach  of  trust 19 

Property  insecure 20 

Unreasonable  prejudice 20 

Unreasonable  disagreement 20 

Will  not  remove 

For  poverty 20 

Caprice  of  beneficiary 21 

Unpleasant  relations  with  beneficiary 21 

For  non-exercise  of  or  manner  of  exercise  of  discre- 
tionary powers,  unless  prejudiced  or  unreasonable  2 1 

For  technical  breach  of  trust 21 

For  breach  of  trust  through  mistake 21 


PART  II. 

THE  INDIVIDUAL  AS  TRUSTEE. 

L    INCIDENTS  OF  THE  TRUST  ESTATE. 
The  legal  and  equitable  estate  in  every  tnirft. 

OWWERSHIP  OF  TUDST  PKOPERTr  ABSOLUTK  IN  TRUSTEE     .      .     22-25 

Incidents  of  ownersliip  fall  to  trustee 23 

Suing  and  being  sued 23-24 

No  right  of  action  if  truHtee  barred .24 

Is  stockholder  in  corporation 24 

Is  personally  bound  by  contracts 24 

Is  liable  to  taxation 25 

Is  liable  in  tort  and  criminally 26 


X  CONTENTS. 

Paobs 

Ownership  wot  BEWEFicrAi, 26-29 

Cau  tuke  nothing  but  established  compensation 27 

Cannot  set  off  debts  in  equity 27 

Cannot  use  the  property 27 

Cannot  buy  the  trust  property 27 

Cannot  borrow  trust  property 28 

Cannot  buy  up  claims  at  discount 28 

May  in  some  States  render  estate  expert  serrices  for  hire, 

in  others  not 28 

Must  account  for  any  benefit  received 29 

Ownership  should  not  be  a  Burden 29-30 

Can  charge  legitimate  expenses.     What  are 29-30 

Entitled  to  reasonable  compensation.     What  is     ...    .  30-33 

Commissions  allowed  in  varions  States 33-36 

Trustee's  Estate 37-38 

In  reaQ  estate ;  only  what  is  needed 37 

In  personal ;  absolute 37 

In  Code  States,  uo  title,  and  is  holder  of  power  only      ...  37 

Is  entitled  to  possession  at  law 38 

Possession  of  beneficiary  is  that  of  trustee 38 

Estate  is  joint ;  eannot  be  severed 38 

Transmission  of  the  Tbusxeb's  Estate. 

Alienation 39-45 

Inter  vivos 3&-44 

May  convey  at  will.     Effect  of  conveyance 39 

•Purchaser  for  value  without  notice,  who  is  and  is  not .     .   39-40 

Title  will  not  pass  under  general  assignment 40 

Cannot  be  taken  foif  trustee's  individual  debts 41 

Subject  to  execution  for  trust  debts 41 

To  what  extent 41 

Set-off 42 

Title  passes  to.  remainderman  even  if  equitable .    .    .    ,    .    42 

Passes  to  successor;  how 43 

Forfeiture 43 

On  death  of  trustee 43 

Vests  in  survivor 43 

On  death  of  sole  trustee  vests  in 44 

General  devisee  when 44 

Heir  or  personal  representatives  when 44 


CONTENTS.  XI 

n.    POWERS. 

In  Gexkkal. 

Paoss 

What  powers  treated 44 

What  Powers  a  Trustee  has 44 

As  incidental 45-47 

Granted  by  court  or  statute 45 

Granted  by  maker  of  trust 46 

Vesting  of  Powers 46 

When  powers  do  not  vest  in  trustee 46 

Vest  in  all  trustees  jointly 46 

Pass  to  successors  and  survivors  wheu 46-47 

General  powers .    47 

Special  powers 47 

Execution  of  Powers 47-48 

The  essential  part  of  a  power 47 

Joint  execution  necessary 48 

Exception  about  collecting  money 48 

Delegation 48-49 

Cannot  delegate  essentials 48-49 

Can  delegate  non-essentials 49 

Partial  or  defective  Execution 49-51 

Defective  execution  aided  for  purchaser 50 

Substantial  execution  of  essentials  confirmed    ......    50 

Literal  execution  of  prescribed  non-essentials  necessary     .    .    50 
Consent,  etc 50 

Control  of  Court  over  Execution 51 

Will  control  obligatory  powers 51 

Will  ratify  when 51 

Will  not  control  discretionary  powers 51-52 

Will  not  inquire  reasons 52 

May  consider  reasons  if  given 52 

Will  set  aaide  for  fraud 52-53 

Extinction  of  Powers 53 

By  death  of  person  having  discretion 53 

Expiration  or  accomplishment  of  trust 53 

Exhausted  by  what 53-54 


Xil  CONTENTS. 

III.    PARTICULAR  POWERS. 

Paoxs 

Power  of  Sale 54-60 

Not  a  geueral  power 54 

Usual  power  in  trust  instruments 54 

Usual  power  under  statutes 55-56 

Court  of  equity  may  decree  sale 57 

ExECUTiox  OF  Power 58 

Must  be  accurate 58 

Defective  aided  when.    Under  statutes 58 

By  court 58 

Purchaser  takes  risk  of  what 59 

Purchaser  must  see  to  application  of  purchase  money  when    .  59 

Pledge  or  Mortgage 60-61 

Not  a  general  power 60 

When  given  by  statute 60 

Court  will  not  order 60 

Power  to  sell  does  not  include 60 

May  give  power  of  sale  mortgage 61 

Partition  and  Exchange 61 

Leasing 61-63 

What  leases  trustee  can  make 61-62 

What  leases  are  binding 61-62 

Special  power  to  lease 62 

Liability  on  covenants 63 

To  Sue  and  Defend 63 

May  incur  expense 63 

All  trustees  must  join 64 

What  admissions  bind 64 

May  compromise 64 

To  Contract 64-65 

Express  contracts  bind  estate  when 64 

Trustee  personally  tound  by  contracts 65 

Signing  as  "  trustee  " 65 

Maintenance  and  Support 65-69 

General  power  when  ..." 65 

Special  power  how  exercised 65 

Mainly  discretional 65 

General  power  how  exercised 65 

Discretion  as  to  amount 67 


CONTENTS.  Xlii 

PilOBS 

Discretion  as  to  amonnt  reviewed  when 67 

Discretion  as  to  apportionment  when  more  than  one 

beneficiary 68 

Miscellaneous 68 

Revocation 69 

Appoint  successor 69 

IV.    DUTIES. 

Duties  to  the  Beneficiary  owing  to  Status 69 

To  support  if  unable  to  care  for  self 69 

When  others  have  duty  to  support 70 

Beneficiary  is  not  a  stranger  in  matters  outside  of  trust      .     .  71 

Contracts  with  beneficiary 71 

Must  not  take  advantage  of  position 71 

Such  transaction  may  be  set  aside 72 

May  accept  employment  from  beneficiary 72 

Duties  in  Exercise  op  Office 72 

Must  exercise  utmost  good  faith  in  execution  of  trust    ...  72 

Must  be  loyal  to  its  and  the  beneficiary's  interests      ....  73 

Must  not  aid  adverse  claimants 73 

Must  not  come  in  competition 73 

Must  consider  interests  of  trust  exclusively  in  its  management  73 

Must  prosecute  suits 73 

Must  not  release  securities 74 

Duty  to  exercise  Trust  personally 74 

Cannot  delegate  to  co-trustee  or  agent 74 

May  employ  agent  where  there  is  necessity 76 

May  employ  agent  to  perform  ministerial  acts 76 

Duty  to  Account 77 

Must  keep  separate  and  accurate  accounts 77 

Books  open  to  inspection  of  beneficiary 77 

Must  settle  accounts  periodically 77 

Entitled  to  settlement  of  account 77 

Form  of  account 78 

Effect  of  account 79 

Account  in  court 79-80 

Account  between  parties 80 

Expense  of  accounting 80 

May  get  ingtmctions  of  court  where  duties  donbtfol  ....  81 


XIV  CONTENTS. 

Paobs 
Where  the  Trustee  is  in  Doubt  as  to  his  Duty  .    .    .    81-82 

May  notify  beueficiary 81 

Cannot  get  instructions  to  enlighten  ignorance 81 

Proper  form  of  raising  questions 82 

V.    MANAGEMENT  OF  FUND. 

What  may  be  trust  property 82 

Must  take  Steps  to  secure  Property  at  once  ....    82-85 

Real  estate.    Place  title  in  joint  names 8i 

Take  possession  of 83 

Personal  property.     Receipt  for  to  settlor 84 

May  not  come  into  possession  at  once      .  84 

Must  examine  predecessor's  account  .    .  85 

Transfer  of  stocks  necessary 85 

Notice  in  case  of  equitable  claims   ...  85 

Should  sue  on  all  claims 85 

Care  and  Custody 8G-88 

Real  estate.    Should  require  tenant  to  attorn  or  take  possession    86 

Personal  property.    Trust  chattels 86 

Money 87 

Non-negotiable  securities 88 

Negotiable  securities 88 

Conversion 89-91 

Usually  necessary  to  some  extent 89 

What  should  be  converted 89-90 

Business,  partnership,  speculative,  unproductive, 
undivided,  or  generally  property  not  trust  secu- 
rities       ■ 89-90 

Liability  for  delay 90 

What  need  not  be  converted 90 

Maker's  reasonable  investments 90 

Securities  at  a  premium 90 

Property  to  be  enjoyed  in  specie 91 

Conversion  of  Real  into  Personal  or  the  Reverse     .    .  91 

May  not  convert  without  authority 91 

What  is  a  conversion 91-92 

Authorized  by  statute 92 

Authorized  by  court 92 

Cy  prfes 92 

Infant's  estate 92 

Implied  authority 93 


CONTENTS.  XV 

PXOES 

Investments 93-104 

Must  keep  funds  invested  at  all  times 93 

Liable  for  simple  interest 93 

Liable  for  compound  interest  when .     .      93' 

Change  investments  when .      94 

Must  invest  securely  and  to  get  current  return 95 

Trust  investments,  what  are 96 

Determined  by  statute 96 

Determined  by  court 96 

Must  exercise  a  sound  discretion 96 

What  is  sound  discretion 97-98 

Determined  by  condition  of  affairs  at  time  of  investing .      99 

Margin  of  security 99 

Proportion  in  one  security 99 

Investments  allowed  in  various  States 100-103 

Principal  and  Income 104-113 

Need  of  dividing 104 

Receipts.    The  estate  paid  in  is  principal 104 

Proceeds  of  conversion  of  securities 104 

Damages  recovered 106 

Gain  and  loss 107 

Advance  or  depreciation  in  value 107 

Timber  and  gravel 107 

Chattels .    108 

Farming  stock 108 

Accumulated  income 108 

Dividends.    Current 109 

On  wasting  investment 109 

Extra  dividend 109-110 

Stock  dividend       109-1 1 1 

Rents 112 

Interest,  generally  income 112 

May  require  apportionment 112-113 

Bonds  bought  at  premium 112 

Apportionment  at  end  of  life  estate 113 

Payments 113-117 

Discharge  of  encumbrances 113 

Alterations  and  repairs 114-115 

When  principal  and  when  income 114 

On  newly  acquired  property 115 

Taxes.    Ordinary 115 

Betterment  and  extraordinary 115 


XVI  CONTENTS. 

Paobb 

Insurance.    Premiums 115-116 

Proceeds  of  policy 116 

Expenses.    Care  of  property 117 

Brokers'  cliarges    .    - 117 

Legal  expenses 117 

DiSTRIBCTtON 117-1:20 

At  risk  of  trustee 117 

May  liave  decree  of  distribution 118 

■  Who  bound  by  decree 118 

Should  not  be  by  fictitious  account 118 

Payment  to  an  attorney 119 

Compensation  for 120 


VL    TpUSTEES'  LIABILITIES. 

To  Strangers.    See  Incidents  of  Ownership,  supra  .    .    .      120-121 
Criminally  for  embezzlement 121 

To  Beneficiaries 121-129 

Are  joint  and  several 121 

Each  transaction  stands  alone 122 

For  neglect  of  dnty 122 

Whether  damage  is  directly  or  indirectly  the  result   .  122 

For  crimes  of  strangers  where  there  is  neglect  ....  122 

Not  for  act  and  default  of  co-trustee 123 

Unless  one  joined  in  the  breach  of  trust 123 

Or  contributed  by  neglect 123-124 

Or  gave  joint  bond 123 

Contribution  from  co-trustee 125 

For  errors  of  judgment 125-127 

In  investing 125 

Paying  to  wrong  person 126 

Must  use  average  discretion 126 

Otherwise  where  discretionary  power 126 

Measure  of  damage 127 

Interest  simple.    Compound  when 127 

May  be  required  to  replace  property 128 

Liability  terminated 129 

By  death 129 

Release 129 


CONTENTS.  XVU 

Paoks 
Account  and  apportionment  of  saccessor      ....    129 

Statute  of  limitations 129 

Insolvency 129 

Successor's  taking  over  property 129 


PART  III 

THE  BENEFICIARY. 

I.  Who  mat  be  a  Beneficiary .    130 

Who  is  the  beneficiary    ...        • 131 

II.  The  Estate  op  the  Beneficiary 132-140 

Incidents  of  the  equitable  estate 132 

Will  descend  like  other  property 133 

Dower  and  curtesy 133 

May  be  alienated 133 

What  estate  passes .    134 

Priority 134 

Notice 135 

Bestraint  on  alienation 136 

Tendency  of  modem  jurisprudence 136 

Exception  as  to  married  women 136 

Rules  in  various  States 137-138 

Spendthrift  trust  made  by  cesser 138 

Support  of  family 139 

Condition  over  on  alienation 139-140 

III.   Rights  of  Beneficiary  against  Trustee  .    .    .      140-147 

Where  enforced 140 

How  enforced 140-141 

Can  compel  what 141 

Damages  for  breach  of  trust 142 

Special  rights 142-147 

Right  to  information 143 

Right  to  income 143-144 

Right  to  support 144 

Right  to  conveyance 145-146 

Right  to  possession 147 

Rights  lost 147-149 

By  Release 148 

Assent     148-149 

Acquiescence 149 

Statute  limitations 149 


XVIU  CONTENTS. 

Paoes 

IV.  Rights  aoaivbt  Stranobbs 149-153 

To  constitute  transferee  of  property  trustee  .    .    .    .      149-150 

May  follow  as  long  as  can  identify 150 

Money  may  be  followed 151 

Must  elect  whether  to  hold  trustee  or  follow    ....    152 
Rights  to  pursue  stranger  aiding  breach  of  trust   ....     152 

What  is  notice  of  trust 152 

Rights  where  disturbed  in  possession 153 

V.  Liabilities 154 


PART  IV. 

INTERSTATE  LAW. 

Trust  invalid  in  jurisdiction  where  sought  to  be  enforced  .  155 

Trust  can  be  enforced 1 55 

Where  trustee  is 155 

Where  property  is 155 

Where  trust  is  established  by  judicial  decree    ....  1 55 

Non-resident  trustees 156 

Foreign  investments 157 

Taxation 157-158 


Index 159 


TABLE  OF  CASES. 


Pages 

Abbott,  Adm'r,  Pet'r  40 

V.  Foote  134,  154 

Abell  V.  Brady  33,  34 

Adair  v.  Brimmer  148 

Adams  v.  Adams  6,  113 

Albert  v.  City  of  Baltimore      152 

Aldrlch  V.  Aldricii  67 

Allen  V.  Gillette  27 

Alley  w.  Lawrence  50 

Ailing  V.  Ailing  71 

Ames  V.  Armstrong  123 

V.  Scudder  87 

Amory  v.  Green  99, 157 

V.  Lowell  80,  115 

Anderson  v.  Daly  141 

V.  Mather  92 

Ansley  v.  Pace  66,  57 

Anthony  v.  Caswell  25 

Arguello,  In  re  87 

Armory  Board,  In  re  61,  65 

Arnold  v.  Alden  34 

V.  Brown  27 

Amould  V.  Grinstead  95 

Atkins  V.  Albree  111 

Attorney-Gen.  i>.  Alford  93 

V.  Briggs  66 

V.  Gleg  38,  47,  48 

V.  Landerfleld  13 

V.  Proprietors,  etc.  150 


Babcock  v.  Hubbard 
Bacon  v.  Bacon 


Badger  v.  Badger 
Baer's  Appeal 
Bagshaw  v.  Spencer 
Bahin  v.  Hughes 
Bailey,  Pet'r 
V.  Lloyd 


Pages 
148 
108 

37 
125 

47 
136 


N.  Eng.  Mut.  L.  Ins.  Co.  158 

Bailie  v.  McWliorter  137 

Baker  v.  Lorlllard  56,  57 

V.  Tibbetts  26 

Barclay  v.  Wainewright  109 

Barker  v.  Barker  142,  152 

V.  Mercantile  Ins.  Co.  24 

Barker's  Trusts,  In  re  14 

Barnes  v.  Dow  137 

Barney  v.  Parsons  103 

Barren  v.  Joy  30,  34 

Barroll  v.  Foreman  60 

Bartlett  v.  Bartlett  133 

Barton's  Trusts,  In  re  110 

Bassett  v.  Granger  80 

Bate  V.  Hooper  104,  154 

Bateman  v.  Davis  50 

Bates  V.  McKinley  111 

V.  Underbill  124 
Bayard  v.  Farmers'  &  Mechan- 
ics' Bank  162 
Beach  v.  Beach  28, 38 
Belchier,  Ex  parte  76 
Belknap  v.  Belknap  134 
Belmont  v.  O'Brien  46 
Beloved  Wilkes'  Charity,  In  re  62 


XX 


TABLE  OF  CASES. 


Betnmerly  v.  "Woodward 
Benett  v.  Wyndham 
Benjamin  v.  Gill 
Bennett  v.  Colley 
Bergengren  v.  Aldrich 


Pages 
127 
26 
73 
149 
62 
Berger  v.  Duff  48,  49 

Berminglmm  v.  Wilcox     121,  124 
Biddle's  Appeal  31,  32 

Billington's  Appeal  92 

Bircher  v.   St.  Louis    Sheet 

Metal  Co.  151 

Bird  V.  Chicago,  I.,  &  N.  Rail- 
road 153 
Black  V.  Ligon  62,  68 
Blacklow  V.  Laws  57 
Blake  v.  Pegram  31,  32,  80,  122, 
123,  124 
Blaurelt  v.  Ackermann  77 
Blythe  v.  Green  51,  66, 108 
Bogle  V.  Bogle  18 
Bohlen's  Estate  55 
Borel  V.  Rollins  61 
Bostick  V.  Winton  53 
Bostock  V.  Floyer  49,  74,  122 
Boston  V.  Robbins  64 
Boston  Safe  Dep.  v.  Mixter  55 
Bostwick,  In  re  70 
Bosworth,  In  re  81 
Bouch,    In    re ;    Sproule  v. 

Bouch  110 

Boulton  V.  Beard  126 

Boursot  V.  Savage  38 

Bowditch  ?'.  Banuelos      10,  15,  18 
Bowen  v.  Penny  120 

Bowers  v.  Evans  151 

Bowes  V.  Seeger  48 

Bowker  v.  Pierce  30,  71,  90 

Boyd  V.  Oglesby  36 

Boyer's  Estate  112 

Boys  V.  Boys  91 

Bradbury  v.  Birchmore  30 

Bradby  v.  Whitchurch        81,  141 
Bradlee  v.  Andrews  67 

Bradshaw  v.  Fane  61 


Pages 

Bradstreet  v.  Butterfield  131 

Brandenburg  v.  Thorndike  146 

Braswell  v.  Morehead  108 

Brice  v.  Stockes  125 

V.  Stokes  148 

Bridge  v.  Conn.  Life  Ins.  Co.  134 

Bridges  v.  Longman  61 

Briggs  V.  Light  Boat  13 

Brinley  v.  Grou  110 

Briscoe  v.  State  33 

Brittlebank,  In  re  53 

Broadway  Bank  v.  Adams  137 

Broeck  v.  Fidelity  Co.  34 

Brooks  V.  Jackson  32 

Brough  V.  Higgins  116 

Brown,  Pet'r  110 

V.  Desmond  140 

V.  French  99 

V.  Gallatly  89 

V.  Lambert's  Adm'r  11 

V.  Macgill  136,  137 

V.  Mercantile  Trust  Co.  69 

V.  Rickets  28 

V.  Wright  101 

Browne  v.  Cross  149 

Bull  V.  Bull  62 

BuUard  v.  Chandler  82 

Bullock,  In  re  ;  Good  v.  Lick- 

orish  138 

Bumgarner  v.  Cogswell  9 
Burgess  v.  Wheate            132,  133 

Burnett  v.  Lester  108 

Burr  V.  McEwen  86 

Bushong  V.  Taylor  66 

Busk  V.  Aldam  12 


Caldecott  v.  Brown 

114,  115 

Calhoun  v.  Furgeson 

108 

Cann  v.  Cann 

93 

Canoy  i;.  Troutman 

89 

Carey  v.  Brown 

28 

Carruth  v.  Carruth 

4,19 

Carson  v.  Carson 

12 

Cassell  V.  Ross 

69 

TABLE  OF  CASES. 


XXI 


Pages 

Cathaway  v.  Bowles  118 

Cavin  t;.  Gleason  152 

Chadbourn  v.  Chadbourn  64,  81 

Chadwick  v.  Heatley  119 
Chapin  v.  First  Univ.  Soc.         38 

Chase  v.  Chase  71,  140 

V.  Searls  134 

Chawner's  Will,  In  re  61 

Cheatham  v.  Rowland   .  65 

Cherry  v.  Richardson  42 

Chester  v.  Rolfe  63 
Chestnut    National  Bank  v. 

Fidelity  Ins.  &  Trust  Co.     69 

Cheyney  v.  Geary  134 

Claflin  V.  Claflin  145 

Clapp  V.  Ingraham  135 

Clark  V.  Beers  96,  100 

V.  Blackington       78,  128,  167 

V.  Clark  38,  52,  76,  124 

V.  Iowa  City  113 

V.  Piatt  33 

V.  Wright  152 

Clarke  v.  Deveaux  181 

V.  Hayes  66 

V.  Hogeman  136 

Cleveland  v.  Hallett  37 

V.  State  Bank  61 

Cllve  V.  Carew  139 

V.  Clive  112 

Clough  0.  Dixon  87 

Cobb  V.  Fant  36,  111 

Cochrane  v.  Schell  138 

Coffin  V.  Bramlitt  102 

Cogbill  V.  Boyd  83 

Coleman,  In  re  68,  139 

V.  Railroad  Co.  130 

CQllier  V.  Munn  28 

Collins  V.  Serverson  67 

Connally  v.  Lyons  66,  120 

Conybeare's   Settlement,  Ex 

parte  14 

Cooley  V.  Scarlett  140,  156 

Coombs  V.  Jordan  69 

Copeland  v.  Manton  135 


Pagca 
Corle  V.  Monkhouse  105 

Corya  v.  Corya  87 

Costabadie  v.  Costabadie  52 

Cousins's  Estate,  In  re      100,  126 
Cowman  v.  Colquhoun  56 

Cowper  V.  Stoneham  152 

Cowx  V.  Foster  135 

Cox  V.  Cox  104 

Crabb  v.  Young  51, 126 

Craig  V.  Craig  18,  19 

Crane  v.  Hearn  124 

Creveling  v.  Fritts  27 

Crocker  v.  Dillon  12,  84, 164 

Cromie  v.  Bull  62 

Cruce  V.  Cruce  94 

Cruger  v.  Halliday  18 

Culp's  Estate  21 

Cummings  v.  Cummings  80 

Cummins  i'.  Cummins  96 

Canard's  Trusts,  In  re  4 

Curtis  V.  Lakin  149 

V.  Smith  8, 140,  165 


Daggett  v.  White 

4 

Dagley  v.  Tolferry 

126 

Darcy  v.  Croft 

116 

Davis's  Appeal 

36 

Davis,  Pet'r 

66 

V.  Charles  River  Branch 

Railroad 

23 

V.  Coburn 

149 

Davoue  v.  Fanning      27, 

128, 

129 

Dean  v.  Lanford 

14.18 

Dedham  v.  Natick 

71 

Deg  V.  Deg 

151 

Denholm  v.  McKay 

27, 

148 

Denike  v.  Harris 

96 

De  Peyster  v.  Ferrers 

44 

Devin  v.  Hendershott 

22 

Dexter  v.  Cotting 

11, 

131 

V.  Phillips 

112, 

113 

Dickinson's  Appeal 

99 

Disbrow  v.  Disbrow 

20 

Dixon  V.  Dixon 

162 

xxu 


TABLE  OF  CASES. 


Pages 
Dixon  V.  Homer  31,  82,  39 

Dodd  V.  Wilkinson  17,  129 

v.  Winship  78,  79,  82,  134 
Dodds  V.  Tuke  30 

Dodkin  v.  Brunt  6,  19 

Doe  d.  Raikes  i'.  Anderson  40 
Dorr  V.  Boston  25 

V.  Wainwright  3,  87,  147 

Downes  v.  Bullock  104 

Drake  v.  Crane  102 

V.  Price  12 

V.  Rice  134 

Draper  v.  Stone  128,  151 

Dublin  Case  13 

Dunn  V.  Dunn  133 

Dyer  v.  Riley  88 

Earl  Cow  let  v.  Wellesley  107 
Earp's  Appeal  106,  110,  111 

Eldredge  v.  Heard  62 

Eliott  V.  Sparrell  93 

Ellig  V.  Naglee  51,  64 

Ellis  i:  Barker  73 

V.  Boston,  H.,  &  E.  Rail- 
road 4,  9.  18 

V.  Ellis  31 

Emery  v.  Batchelder  101, 119, 156, 
167 
English  17.  Mclntyre  155 

Ervine's  Appeal  56,  70,  91 

ETa,ngelical  Synod  v.  Schoe- 

neich  161 

Evans's  Estate  75,  152 

Evans  v.  John  2 

Everett  v.  Drew  23,  65 

Fairbanks  v.  Sargent  135 

Fairland  v.  Percy  41 

Farmers'  Loan  &  Trust  Co., 

In  re  121 

V.  Lake  St.  Elevated  Rail- 
road 19 
Fansset  w.  Carpenter                  40 
Fay  V.  Haven                            155 
Felch  0.  Hooper                       140 


Fenwick  v.  Greenwell 
Fernstler  v.  Seibert 
Fidelity  Co.  v.  Glover 
Fidler  v.  Higgins 
Field  V.  Field 


Pages 

122 

153 

101 

91 

88 


V.  Middlesex  Banking  Co.  71, 
148 
V.  Wilbur  65 

Finlay  v.  Merriman  103 

First  National  Bank  v.  Morti- 
mer 139 
V.    National     Broadway 
Bank                           156 
Fisher  v.  Wister                         140 
Fitzgerald,  In  re  82 
Fleming  v.  Wilson  84 
Fletcher  v.  Greene                     186 
Flint  V.  Clinton  Co.  6 
Flowers  v.  Franklin                   108 
Forbes  v.  Lothrop               133,  140 
Forster  v.  Davies                        21 
Forward  v.  Forward                    29 
Fosdick  V.  Town   of  Hemp- 
stead                                       130 
Foster  v.  Bailey                         120 
V.  Cockrell                           135 
V.  Elsley                        82,  131 
V.  Foster                              79 
V.  Smith                              140 
Fox  V.  Storrs                               16 
Franklin  v.  Osgood                     47 
Franklin     Savings    Bank    v. 

Taylor  41 

Frazer  v.  Western  53 

Freedman's  Co.  v.  Earle  132 

Freeman  v.  Cook  128 

Frere  v.  Winslow  118 

Frierson  v.  Branch  38 

Fyler  v.  Fyler  104,  147 

Gamble  v.  Gibson  28,  102 

Garesche  v.  Levering  Invest- 
ment Co.  68 
Garesche  i;.  Priest                     102 
Garland  v.  Garland                  137 


TABLE  OF  CASES. 


XXUl 


Garvey  v.  Garvey 

62 

Gasquet  v.  Pollock 

68 

Geaves,  Ex  parte 

80,83 

George,  In  re 

70 

Gerry,  In  re 

106 

Gibbons  v.  Malion 

110 

Gill,  In  re 

32 

V.  Carmine 

120 

Gillespie  v.  Smith 

49 

Gleason  v.  Boston 

71 

Glenn  v.  Allison 

120 

Glink  V.  La  Fayette 

16 

Gloyd's  Estate,  In  re 

84 

Good  V.  Lickorish ;  In  re  Bul- 
lock 138 
Goodrich  v.  Proctor  55 
Goodson  V.  Ellisson  145 
Gordon  i;.  West  35,  117 
Graham  v.  Austin  74,  124 
V.  King  58,  74,  76 
r.  Roberts'  116,117 
Granger  v.  Bassett  110,  111 
Gray  v.  Corbit  137 
Greason  v.  Keteltas  61 
Greene  v.  Mumford  25,  81,  82 
V.  Greene  105 
V.  Smith                  67,  71,  110 
Greenwood  v.  Coleman  37 
Griffin  v.  Pringle  ^      33 
Griffith  V.  Hughes  125,  148 
Grinnell  v.  Baker  103 
Griswold  v.  Sackett  7 
Groton  v.  Ruggles  12 
Guion  V.  Pickett  7 
Gunn  V.  Brown  146 
Gunter  v.  Janes  121,  129 


Hadden  v.  Spader 

184 

Hagan  v.  Piatt 

104 

Halm  V,  Hutchinson 

138 

Hall  V.  Gushing 

12 

V.  Ditto 

150 

Hallett,  In  re ;  EJiatchbuIl  v. 
Hallett  151 


Hallows  V.  Lloyd  1,  83 

Halsey  v.  Tate  148 

Halsted  v.  Meeker's  Ex'rs         102 
Hamlin  t;.  Hamlin  133 

Hammond  v.  Granger  47 

Harlow  v.  Cowdrey  44 

Harrington  v.  Brown  27 

Harris  v.  Elliott  134 

Harrison  v.  Pepper  116 

Harte  v.  Tribe  68 

Hartman's  Appeal  131 

Harvard  Coll.  v.  Amory      90,  96, 
97,99 

V.  Weld  56 

Hassard  v.  Rowe  92 

Hawley  v.  James  49, 141 

V.  Ross  131 

Haxall's  Ex'rs  v.  Shippen  116, 117 
Haydel  v.  Hurck  51 

Heard  v.  Eldredge      106,  110,  117 
Heath  v.  Bishop  137 

Heighe  v.  Littig  107 

Hemenway  v.  Hemenway  107, 112 
Hemphill's  Appeal  103 

Henderson's  Estate  145 

Hepburn  v.  Hepburn  114 

Herron  v.  Marshall  24 

Hext  V.  Porcher  83 

Hibbard  v.  Lamb  47 

Hilliard  v.  Fulford  119 

Hills  V.  Barnard  82 

V.  Putnam  67,  70,  81 

Hinson  v.  Williamson  123 

Kite's  Devisees  v.  Hite's  Ex- 
ecutors 105,  111,  112,  115 
Hobbs  1-.  Smitli  137 
Hodges  V.  Bullock  152 
Hoke  V.  Hoke  86 
Holmes,  In  re                           161 

V.  Dring  98 

Holt  V.  Hogan  63 

Hopgood  V.  Parkin  76 

Hopkinson  v.  Burghlcy  77 

HortOD  V.  Brocklehurst  123 


XXIV 


TABLE  OF  CASES. 


Houghton  V.  Davenport  41,  151 

Housman,  In  re         108,  116,  117 

Hovey  v.  Dary  92 

How  V.  Waldron  120 

Howard  v.  Fay  151 

V.  Gilbert  19 

Howe  V.  Lord  Dartmouth  91,  105 

V.  Ray  3 

Howland  v.  Green  117 

Hoyt,  In  re  112 

V.  Latham  27,  149 

Hubbard  v.  Fisher  36 

Hubbell  V.  Medbury  149 

Hughes  V.  Chicago  Co.  21 

Hun  V.  Cary  126 

Hunt,  Appellant  97 

V.  Gontrum  98,  101 

V.  Perry  25,  158 

V.  Smith  151 

V.  Watkins  108 

Huntington  v.  Jones  138,  140 

Hutchison's  Appeal  145 


Insurance  Co.  v.  Chase 

86 

V.  Smith 

141 

Irvine  v.  Dunham 

20 

V.  Irvine 

13 

Isherwood  v.  Oldknow 

63 

Iverson  v.  Saulsbury 

148 

Jackhan  v.  Nelson  68 

Jackson  v.  Von  Zedlitz      71,  136, 
139 
Jencks  v.  Alexander  14 

Jenkins  v.  Lester  140,  155 

V.  Whyte  31,  79 

Jennison  v.  Hapgood     32,  94,  127 
Jewett,  Ex  parte  92,  93 

Johns  V.  Johns  57,  91,  92 

Johnson  v.  Bridgewater  MTg 

Co.  112 

I'.  Lawrence  31 

Johnstone  v.  Baber  56 

Jones's  Appeal  74,  75 


Pages 

Jones  V.  Atch.,  Top.,  &  S,  Fe' 

Rd.  64, 55 

V.  Dougherty  142 

V.  Foote  68 

V,  Home  Savings  Bank    119, 

149 

V.  Lewis  88,  122 

V.  McPhillips  21 

Jourolman  v.  Massengill  137 

Judson  V.  Corcoran  134 

Kane  v.  Kane's  Adm'r  127 

Kaufman  v.  Crawford  93 

Keane  v.  Robarts  60 

Keitii  V.  Copeland  144 

Kemp  V.  Foster  '  85 

Kernochan's  Case  110 

Key  V.  Hughes  103 

Keyes  v.  Carleton  69 

Kilbee  v.  Sneyd         5,  74,  87,  125 

Kildare  v.  Eustace  140 

Kimball  v.  Reding  99 

King  V.  Bellord  .  18 

V.  Boys  18 

V.  Cushman  28 

V.  Mildmay  48 

V.  Mullins  77 

V.  Parker  37 

V.  Talbot  95,  96,  97,  99 

Kiumouth  v.  Brigham   89,  95,  104 

Knatchbull  v.  Hallett  151 

Knefler  v.  Shreve  137 

Knight  r.  Boston  95 

Knox  V.  Jenks  58 

Krebs's  Estate  145 

Kyle  V.  Barnett  28 

Lampert  v.  Haydel  137 

Lamson  v.  Knowles  118 

Landis  v.  Scott  77 

Lang  V.  Lang's  Executor  112 

Langton  v.  Brackenbury  68 

Lathrop  v.  Smalley's  Ex'rs  102 

Lawrence  v.  Lawrence  69 


TABLE  OF  CASES. 


XXV 


Pages 

Laws  V.  Williams 

156 

Lawton  v.  Lawtoa 

96 

Learned  v.  Welton 

38 

Lee  V.  Brown 

70 

V.  Hewlett 

135 

V.  Sankey 

48 

Leeds  Ex'r  y.  Wakefield  60 

Leggett  V.  Hunter  56 

Leigh  V.  Harrison  137 

Leland  v.  Hay  den  110 

Lemen  v.  McComas  146 

Lent  V.  Howard  145 

Lenz  V.  Prescott  119 

Leonard  v.  Owen  108 

Lerow  v.  Wilmarth  116 

Lessee  of  Ward  v.  Bar*ow8        53 
Levi  V.  Gardner  132 

Levy's  Trust,  In  re  .  139 

Lewis  V.  Davis  108 

V.  Nobbs  87,  88 

Life  Association  of  Scotland  v. 

Siddal  81,  141 

Lincoln  v.  Aldrich  82 

Lindsay  v.  Harrison  138 

Lingke  v.  Wilkinson  27 

Little  V.  Cliadwick  152 

V.  Little  30,  114,  132 

Livingston  v.  Livingston  14 

Lloyd  V.  Banks  135 

Londesborough  v.  Somerville  112 
Lord  V.  Brooks  109,  111 

Loring  v.  Brodie  60,  160 

V.  Loring  71 

V.  Salisbury  Mills    10,  83,  86, 
152,  154 
Loring  Adm'r  v.  Steineman      118 
Lovett  V.  Farnliam  53 

Low  V.  Bouverie     64,  84,  121,  143 
Lowe  V.  Convention  of  Prot. 

Ep.  Ch.  101 

Lowrie's  Appeal  28 

Mackbt's  Adm'b  v.  Coates      64 
Maclaren  v.  Stainton        105,  118 


Pages 
Magnus  v.  Queensland  Nat. 

Bank  48,  152 

Major  i;.  Herndon  108 

Manderson's  Appeal  41 

Mandlebaum  v.  McDonell  140 
Mannix  v.  Purcell  65 

Mant  V.  Leitli  148 

March  v.  Berrier  91 

Marshall  v.  Marshall  121,  161 
Mason  v.  Pomeroy  41 

Mass.  Gen.  Hosp.  v.  Amory  6 
Massey  v.  Stout  100 

Massie  v.  Watts  82,  140,  155 

Matthews  v.  Brise  88,  89 

Mattocks  V.  Moulton  96,  98,  101 
May  V.  May  31,  34,  66,  68 

Mayer  v.  Galluchat  28 

McCaffrey,  In  re  61 

McCann  v.  Randall  8,  141 

McCartin  v.  Traphagen  121,  125 
M'Clanahan  v.  Henderson  73 

McCloskey  v.  Gleason  103 

McCoy  I'.  Poor  150 

McDonald  v.  Irvine  87,  91 

V.  Kneeland  135 

Mclntire's  Adm'rs  v.  Zanesville  96 
Mclntyre,  In  re  122 

McKim  V.  Blake  127 

V.  Doane  16 

V.  Hibbard  94,  127,  128 

McKnight  v.  Walsh  67,  68,  70 
McLeod  V.  Evans  151 

McLouth  V.  Hunt  110,  111 

McNeillie  v.  Acton  96 

McPherson  v.  Cox  20 

McQueen  r.  Farquhar  61 

Meeker  i;.  Crawford  30,  31 

Mecks  V.  Olplierts  24 

Meldon  v.  Devlin  40,  106 

Mendes  v.  Guedalla  48,  88.  89, 152 
Mercantile  Trust  Co.   v.  St. 

Louis  St.  Ry.  Co.  161 

Mercier  v.  West  Kansas  Land 

Co.  68 


XXVI 


TABLE  OF  CASES. 


Merriam  v.  Ilassam 

160 

Merrill  v.  Preston 

156 

Merry  v.  Pownall 

30 

Meyers  v.  Bennett 

41 

Milbank  v.  Crane 

8,17 

Millen  v.  Guerrard 

110 

Miller,  Matter  of 

18 

V.  Redwine 

60 

Minot  V.  Prescott 

50 

V.  Tappan 

108 

V.  Thompson 

90 

Mitchell  V.  Whitlock 

65, 120 

V.  Winslow 

82 

Molton  V.  Henderson 

24, 150 

Monday  v.  "Vance 

137 

Monell  V.  Monell 

87,  123 

Moore  v.  Eure 

102 

More  V.  Calkins 

32 

Morgan  v.  Kansas  Pacific  Rail- 
road 23,  141 

V.  Moore  16,  42 

Morrill  v.  Morrill  78 

Morrison  v.  Lincoln  Savings 

Bank  151 

Morse  v.  Hill         27,  79,  128, 129, 
132,  142,  148,  149 
Mortimer  v.  Ireland  17,  44 

Mortlock  V.  BuUer  59 

Morville  v.  Fowle  38,  47,  74 

Mulrein  v.  Smillie  65,  120 

Munroe  v.  Holmes  78 

Murray  v.  Feinour  94 

Muscogee  Co.  v.  Hyer  34 

Nance  v.  Nance  103 

Nash  V.  Coates  37 

Nathans'  Estate,  In  re  20 

National  Bank  v.  Insurance  Co.  42, 

151 

Nelson  v.  Duncombe  63,  69 

New  V.  Nicholl  65 

■  New  Eng.  Trust  Co.  v.  Eaton   82, 

90,  94,  106, 107, 109,  115 

Newcomb  v.  Eeteltas  62 


Pages 
Newhall  v.  Wheeler  163 

New  York  Life  Ins.  &  Trust 

Co.  V.  Baker  112 

V.  Sands  116 

New  York  Co.  v.  Schuyler       134 
Neyland  v.  Bendy  73, 146 

Nichols,  Appellant  72,  148 

V.  Eaton  187,  139 

Nickels  v.  Philips  21 

Nobles  V.  Hogg  103 

Norciim  v.  D'Oench  47 

Norling  v.  Allee  26,  154 

Norris  v.  Clymer  55,  56 

North    Adams     Universalist 

Soc,  V.  Fitch  6 

North    Amer.    Coal    Co.    v. 

Dyett  65 

Norton  v.  Norton  87 

V.  Phelps  41 

Nugent  V.  Cloon  46 

Nyce's  Estate  98 

Ochiltree  v.  Wright  48 

Oeslager  v.  Fisher  92 

Old  South  Soc.  V.  Crocker  57 

Oliver  v.  Court  58,  123 

Olmstead,  In  re  19 

Olney  v.  Balch  13 

Onslow  V.  Wallis  12 

Ord  V.  Noel  58,  59 

Ormiston  v.  Olcott  99,  157 

Ouseley  v.  Anstruther  94 

Overman's  Appeal  137 

Owens  V.  Walker  67,  68 

Pace  v.  Pace  137 

V.  Pierce  37,  38 
Pacific  Bank  v.  Windram  135,  136 

Packard  i;.  Kingman  65,  120 

V.  Marshall  42 

Paddock  v.  Palmer  20 

Palmer  v.  Wliitney  119 

Parcher  v.  Bussell  79 

Parker  v.  Ames  82 


TABLE  OF  CASES. 


xxvu 


Pages 

Parker  v.  Converse 

16 

V.  Johnson 

106 

V.  Moore 

14 

V.  Seeley 

120 

Parsons  v.  Winslow 

105,  113, 

114,  115 

Paschal  v.  Acklin 

155 

Pass  V.  Dundas 

125 

Pearson  v.  Jamison 

■48 

Peck  V.  Sherwood 

116 

Peckhara  v.  Newton 

103 

Pell  V.  De  Winton 

60 

Penn  v.  Folger 

11 

Pennell  v.  Deffell 

151 

People  V.  Townsend 

26,  154 

Perkins's  Appeal 

28,29 

Perkins  v.  Moore 

12 

Perrine  v.  Newell 

29,30 

V.  Vreeland 

126 

Person  v.  Warren 

13 

Philbrick's  Settlement 

12 

Phillppi  V.  Philippe 

149 

Philips  V.  Philips 

134 

Pierce  v.  Burroughs 

116 

V.  Prescott 

118,  126 

Piety  V.  Stace 

28 

Pinckard's     Distributees    v. 

Pinckard's  Adm'r  33 
Pitney  v.  Everson  31 
Plympton  v.  Boston  Dispen- 
sary                               113,  115 
Poindexter  v.  Blackburn  108 

V.  Burwell  65 

Pool  V.  Harrison  130 

Pope  V.  Devereux  64 

V.  Famsworth  148 

Porter  v.  Bank  of  Rutland  14 

V.  WoodruflF  98 

Portsmouth  v.  Shackford  51 

Potter  V.  Couch  139 

Powcey  V.  Bowen  63 

Premier  Steel  Co.  v.  Yandes  34 

Presley  v.  Stribling  88 

Prevost  V.  Gratz  148 


Pages 

Pritchitt  V.  Nashville  Trust 

Co.  Ill 

Proctor  V.  Heyer  62 

Purdie  v.  Whitney  66 

Pusey  V.  Clemson  86 

Qdackenboss  v.  Southwick      20 

Quin's  Estate  133 

Quirk  V.  Liebert  27, 148 

Rabt  v.  Ridehalgh  125,  148 

Rand  v.  Hubbell  110 
Randolph  v.  E.  Birmingham 

Land  Co.  100 

Ray  V.  Doughty  47 

Reed  v.  Head  109 

V.  Whitney  133 

Reese  v.  Meetze  32 

Reid  V.  Mullins  73 

Rhoads  v.  Rhoads  146 

Richardson  v.  Boston  25 

V.  Richardson  110 

Riddle  v.  Whitehill  149 

Ridgley  v.  Johnson  48 

Roberts  v.  Stevens  137 

Robertson  v.  Collier  108 

V.  Johnston  137 

Robinson  v.  Robinson  93,  95,  126 

V.  Wheelwright  136 

Rogers  v.  Chase  40 

V.  Dill  92 

V.  Rogers  6 
Rome    Exchange    Bank    v. 

Eames  137 

Roosevelt  v.  Van  Allen  82 

Rosenbaum  v.  Garrett  155 

Roxburghe  v.  Cox  185 

Ruggles  i;.  Tyson  60,  53,  67 

Russell  V.  Grinnell  146 

Ryan  v.  Porter  56 

Ryder  v.  Bickerton  100 


Salmon,  In  re 
Samuel  t;.  Samuel 


83,  99,  129 
139 


XXVIU 


TABLE  OF  CASES. 


Pages 

Fag«fl 

Sanders  v.  Houston  Guano  & 

Sianey  v.  Watney 

4 

Warehouse  Co. 

41 

Slauter  v.  Favorite 

98,  101 

Sargent  i-.  Sargent 

12 

Slevin  v.  Brown 

87 

Saunders  v.  Ha  ugh  ton 

108 

Sloan's  Estate 

143 

17.  Vautier 

145 

Slocum  V.  Slocum 

53 

Schaffer  v.  Wadsworth 

96,  147 

Smith  V.  Barnes 

143 

Schenck  v.  Barnes 

137 

V,  Burgess 

40 

V.  Sclienck 

44 

V.  Knowles 

6 

Schley  v.  Brown 

67 

V.  Lansing 

82 

Schluter  v.  Bowery  Savings 

V.  Smith 

145 

Banks 

i:^ 

V.  Towers 

137 

School  Dist.  V.  First  Bank 

42 

Smyth  V.  Burns 

102 

Schouler,  Pet'r 

47 

Snowhill  V.  Snowhill 

91,92 

Scljwab  V.  Cleveland 

26 

Sohier  v.  Eldredge 

114 

Scott  V.  Rand 

19,20 

Spangler's  Estate 

117 

i;.  Ray 

73 

Sparhawk  v.  Buell 

119 

Seamans  v.  Gibbs 

146 

V.  Sparhawk 

20 

Sears  v.  Choate 

146 

Speidel  v.  Henrici 

148,  149 

Seidelbach  v.  Knaggs 

37 

Speight  V.  Gaunt 

76 

Sergison,  Ex  parte 

13 

Spencer  v.  Spencer 

82 

Sever  v.  Russell 

79 

Sproule  V.  Bouch 

110 

Sewell  V.  Wilmer 

165 

Stanley  v.  Colt 

56 

Seymour  v.  McAvoy 

139 

V.  Stanley 

186 

Shaw  V.  Cordis 

112 

State  V.  Guilford 

74,75 

V.  Paine 

8,  19 

V.  Piatt 

30 

V.  Spencer 

40,  163 

Stearns  v.  Fraleigh 

18 

Sheets's  Estate 

12 

V.  Palmer 

158 

Sheffield  v.  Parker 

84 

Steib  V.  Whitehead 

137 

Shepard  v.  Creamer 

26 

Sterling  v.  Sterling 

73 

Shepherd  v.  Hammond 

36 

Stetson  V.  Bass 

79 

Sherman  v.  Parish 

126 

Stevens  v.  Austen 

44 

V.  White 

101 

Stockdale  v.  South  Sea  Co.       162 

Sherrill  v.  Shuford 

35 

Stone,  Ex  parte 

16 

Shirley  v.  Shattuck 

35 

V.  Clay 

95 

V.  Shirley 

14 

V.  Godfrey 

73 

Sholty  V.  Sholty 

101 

V.  Kahle 

55 

Shook  V.  Shook 

39,43 

V.  Littlefield 

115 

Shuey  v.  Latta 

101 

Story  V.  Gape 

120 

Shumway  v.  Cooper 

91 

Stott  V.  Lord 

47,  48,  64 

Simmons  v.  Oliver 

103 

V.  Milne 

126 

Sinclair  v.  Jackson 

38,62 

Stowe  V.  Bowen 

123 

Singleton  v.  Lowndes 

103 

Strickland  v.  Symons 

41 

Sise  V.  Willard 

146 

Sturges,  In  re 

6 

Blade  v.  Van  Vechten 

28 

Sugden  v.  Crossland 

29 

TABLE  OF  CASES. 


XXIX 


Swale  V.  Swale 
Swartwout  v.  Burr 


Tabor  v.  Brooks  52 

Taylor  v.  Buttrick  69,  71 

V.  Davis  24,  65, 120 

V.  Hite  102 

Teague  v.  Corbitt  29 

Tebbs  V.  Carpenter  122 

Tempest,  In  re  15 

Thayer  v.  Daniels  85,  135 

V.  Kinsey  83,  129 

Third  Nat.  Bank  v.  Lange        40, 

59,  149 

Thomas  v.  Bowman  •     73 

V.  Gregg  111 

V.  Higham  18 

Thompson  v.  Fmch     121, 125, 129 

V.  Murphy  137 

V.  Peake  40 

V.  Remsen  141 

Tillinghast  v.  Bradford  137 

V.  Coggeshall  133 

ToUes  V.  Wood  139 

Townend  v.  Townend  28 

Townley  v.  Sherburne  123 

Treadwell  v.  Salisbury  Mfg. 

Co.  82 

Trull  V.  Trull  98 

Trust  Co.  V.  Sheldon  49,  52,  82 

Tryon,  In  re  4 

Tucker  v.  State  101 

V.  Tucker    ,  102 

TurnbuU  v.  Pomeroy  28,  31 

Turner  v.  Maule  7 

Tutlle  V.  Gilmore  99,  127 

V.  Robinson  35 

U.  S.  Tkust  Co.  v.  Roche    23,  60 
Urann  v.  Coates  31 

Utica  Ins.  Co.  t;.  Lynch  93 


Vandebbilt,  In  re 
Vandever's  Appeal 


52 
47,64 


Van  Doren  v.  Olden  106,  111 

Van  Vechten  v.  Terry  23 

Van  Vronker  v.  Eastman  106, 113 

Vaughton  v.  Noble  72 

Vetterlein  v.  Barnes  23 

Vinton's  Appeal  110 

Vyse  V.  Foster  122 

Wade  v.  Lobdell  148 

Wadsworth,  Matter  of  47 

Wagnon  v.  Pease  9,  82 

Walker  v.  Beal  145 

V.  Brooks               '  42 

V.  Shore  147 

Wallston  V.  Braswell  135 

Walton  V.  FoUansbee  146 

V.  Ketchum  24 

Warburton  v.  Sandys  17 

Ward  V.  Harvey  150 

V.  Kitchen  94 

Warnecke  v.  Lembca  47 

Warren  v.  Ireland  41 

Waterman  v.  Baldwin  60 

V.  Spaulding  58 

Watts  V.  Howard        115,  116,  143 

Wayraan  v.  Jones  162 

Weaver  v.  Fisher  77 

Webb  V.  Dietrich  20 

V.  Ledsara  48 

Webster  v.  Vandeventer  .17,  46 

Webster  Bank  v.  Eldridge  10 

Weeks  v.  Hobson  56,  92 

Welch  V.  Adams  157 

V.  Allen  37 
Wemyss  o.  White  47 
Westcott  V.  Nickerson  104,  105 
Westerfleld,  In  re  124)  126 
Western  Railroad  Co.  v.  No- 
lan 38,  131,  154 
Wetherell  v.  O'Brien  151 
Wetmore  v.  Porter  23, 160 

V.  Truslow  16 

Wheate  v.  Hall  54 

Wheeler  v.  Perry  12, 81 


XXX 


TABLE  OF  CASES. 


White  V.  Albertson 
V.  Cuddon 
V.  Ditson 
V.  Wiley 
Whiteley,  In  re 
Wliitney  v.  Smitti 
Wliittier  v.  Ciiild 
Wiggin  V.  Swett 
Wilding  V.  Bolder 
Wiles  V.  Gresham 
Wilkes  V.  Rogers 
Wilkins  v.  Hogg 


38 

69 

12,  122 

135 

99 

29 

66 

116,  116 

14 

122,  127 

71 

123,  125,  127 


Williams  v.  Bradley  68 

V.  First  Presb.  Soc.  150 

V.  Smith  67 

Williamson  v.  Berry  66,  92 

V.  Williamson  144 

Wilson  V.  DavisBon  69 

i;.  Wilson  20,  62,  66, 131 

Wiltbank's  Appeal  106,  111 

Winona  Co.  v.  St.  Paul  Co.        13 

Winthrop  i;.  Atty.-Gen.  74 

Wise  V.  Wise  2 


PagM 

Woddrop  V.  Weed 

49 

Womack  v.  Austin 

96,99 

Wood  V.  Burnham 

74 

V.  Travis 

8 

V.  Mather 

93 

Woodard  v.  Wright 

30 

Woods  V.  Sullivan 

108 

Wootten  V.  Burch 

108 

Wormeley  i;.  Wormeley 

40,60 

Wormly  v.  Wormly 

69 

Worrell's  Appeal 

96 

Wright's  Trusts,  In  re 

77 

Wych  V.  East  India  Co. 

24 

Wylly  V.  Collins 

41 

Yeackel  v.  Litchfield 

142 

Yerkes  v.  Richards 

66 

Young  V.  Snow 

146 

V.  Young 

16 

Zabeiskie  v.  Wetmore 

146 

Zimmerman  v.  Makepeace 

141 

A  TRUSTEE'S  HANDBOOK. 


PART   I. 

THE  TRUSTEE   AS   AN  INDIVIDUAL. 

I.  Office  not  always  Desirable.  —  Trusteeship  is  not 
mere  contract  to  manage  property  for  another,  but  it  is 
a  relationship,  involving  many  duties  and  liabilities. 

It  is  not  always  desirable  to  be  a  trustee,  and  before 
undertaking  any  trust  the  individual  should  make  a  care- 
ful examination  of  the  trust  instrument  to  ascertain  its 
particular  provisions  and  what  his  duties  and  liabilities 
will  be.^  He  should  also  examine  the  property  to  see 
that  his  personal  interests  will  not  conflict  with  his  duties 
as  trustee. 

The  duties  of  a  trustee  to  his  beneficiary  require  not 
only  the  highest  good  faith  in  their  execution,  but  also 
the  absence  of  conflicting  personal  interests,  and  often  the 
sacrifice  of  personal  convenience  and  chance  of  profit.'* 

An  individual  may  be  willing  to  trust  the  whole  or 
some  part  of  the  management  of  his  personal  affairs  to 
others ;  but  a  trustee  must  manage  the  trust  affairs  him- 
self.^ The  individual  might  have  important  employment 
as  broker  or  counsel  for  the  trust  estate,  but  if  he  is  the 
trustee  such  services  will  be  unpaid  in  some  jurisdictions, 
or  at  least  looked  on  with  suspicion,  or  he  might  buy 
from  the  estate  or  sell  property  to  it,  but  as  trustee  he  is 
deprived  of  these  privileges.    Moreover,  he  is  put  in  such 

1  Keckiwith,  J.,  in  Hallows  v.  Lloyd,  39  Ch.  D.  691.    Infra,  p.  82. 
a  Infra,  pp.  72,  74.  »  Infra,  p.  74. 

1 


2  A  TRUSTEE  S   HANDBOOK. 

confidential  relationship  to  his  beneficiary  that  any  profit- 
able business  dealings  which  he  has  with  the  beneficiary 
are  subject  to  suspicion,  even  where  the  trust  property 
is  not  in  question.^ 

In  additioy  to  the  complications  that  may  arise  from 
the  relationship  to  the  beneficiary,  the  trustee  assumes  all- 
the  liabilities  involved  in  the  ownership  of  property,  and 
for  neglect  or  errors  in  judgment  in  its  management.^ 
He  may  be  required  to  give  bonds  with  sureties  for  the 
faithful  performance  of  his  duties.^ 

To  counterbalance  these  possible  disadvantages  the 
trustee  is  entitled  in  America  to  compensation,  generally 
to  the  same  extent  as  an  agent  or  factor  who  manages 
the  affairs  of  others.*  He  is  absolutely  prohibited  from 
taking  any  other  benefit  from  the  trust.* 

II.  Disclaimer.  —  No  one  need  be  a  trustee  against  his 
"will,  since  an  acceptance  of  the  office  is  necessary ;  ®  and 
the  oflfice  may  be  refused  or  disclaimed  at  any  time  before 
acceptance,  even  though  the  trustee  were  nominated  under 
his  promise  of  acceptance.'' 

It  is  true  that  a  trust  estate  may  vest  in  the  heir  or  rep- 
resentatives of  a  deceased  trustee  without  possibility  of 
disclaimer ;  *  but  in  such  case  the  heir  or  representative 
takes  only  the  title  to  the  property,  and  a  limited  trust  to 
transfer  the  estate  to  the  new  trustee,  when  appointed, 
and  if  he  is  the  personal  representative  to  settle  the  ac- 
counts of  the  deceased  trustee. 

If  the  oflBce  is  to  be  disclaimed  it  must  be  disclaimed  at 
once  and  unequivocally,  as  otherwise  an  acceptance  may 
be  implied.® 

1  Infra,  p.  71.  ^  /„/}-«,  p.  26.  «  Infra,  p.  10. 

*  Infra,  p.  30.  6  Infra,  p.  27. 

«  Ga.  Code  (1895),  §  3190. 
'  Evans  v.  John,  4  Beav.  35. 

8  Co.  LJtt.  9  a.    Infra,  p.  45. 

9  Wise  V.  Wise,  2  Jon.  &  La.  403. 


THE  TRUSTEE  AS  AN  INDIVIDUAL.  3 

No  particular  form  of  disclaimer  is  necessary ;  but  it 
should  be  affirmative  and  decided.  Although  a  simple 
verbal  refusal  to  undertake  the  trust  is  sufficient,  such  a 
disclaimer  would  be  unwise  in  most  cases,  and  probably 
difficult  of  proof  after  a  considerable  period  had  elapsed. 

In  general  the  disclaimer  should  be  in  writing,  and 
recorded  where  the  settlement  is  recorded ;  and  if  the 
settlement  is  not  recorded,  then  addressed  and  delivered 
to  whomever  has  the  custody  of  the  instrument ;  that  per- 
son being  in  most  cases  one  of  the  beneficiaries. 

If  the  trust  instrument  is  a  deed,  then  the  disclaimer 
should  be  by  deed,  but  not  in  the  form  of  a  reconveyance 
which  presupposes  an  acceptance,  and  vesting  of  the  estate  ; 
though  in  practice  it  would  not  probably  be  so  construed,^ 

If  the  trust  instrument  is  a  will,  a  disclaimer  filed  in 
the  Probate  Court  is  appropriate,  although  the  failure  to 
qualify  or  give  bond  in  court  is  usually  construed  as  a 
disclaimer  by  statute ;  ^  but  such  a  disclaimer  cannot  be 
set  up  by  a  person  other  than  one  for  whose  security  the 
bond  is  given  until  some  action  is  taken  by  the  court.* 

A  trust  must  be  disclaimed  wholly,  as  trusts  are  not 
divisible,*  and  if  an  executor  have  the  management  of 
real  estate  given  him,  or  the  other  administration  of  prop- 
erty in  which  he  acts  the  part  of  a  trustee  as  well  as  ex- 
ecutor, he  cannot  separate  his  duties  and  accept  part  and 
disclaim  the  other.^ 

Where,  however,  a  person  is  appointed  executor  and 
trustee  under  the  same  will,  he  may  disclaim  either  office 
and  accept  the  other,  unless  there  appears  to  be  an  inten- 

1  Lewin,  p.  207. 

2  Gen.  Stat.  Conn.  (1888),  §490;  Rev.  Stat.  Me.  (1883),  ch.  68, 
§3;  Rev.  Stat.  Mo.  (1889),  §  8689;  Rev.  Laws  Vt.  (1894),  §  2608. 
But  the  refusal  to  give  bond  is  treated  as  a  ground  for  removal,  not  as 
a  disclaimer,  in  some  States.  Rev.  Stat.  Ohio  (1890),  §  5983;  Code 
Va.  (1887),  §  3420;  Code  Ala.  (1896),  §  4155. 

«  Howe  V.  Ray,  110  Mass.  298. 

*  In  New  Jersey  trusts  are  divisible.     Underbill,  p.  420,  n. 

6  See  Shaw,  C.  J.,  in  Dorr  v.  Wainwright,  13  Pick.  328,  331. 


4  A  trustee's  handbook. 

tion  on  the  part  of  the  testator  that  he  should  accept  both 
or  neither.^ 

It  is  said  that  when  two  trusts  are  created  by  the  same 
instrument  both  must  be  disclaimed  or  accepted  ;  ^  but  the 
better  view  seems  to  be,  that  where  they  are  wholly  sep- 
arate trusts  not  interdependent,  and  no  intention  appears 
that  both  or  neither  shall  be  accepted,  one  may  be  accepted 
and  the  other  disclaimed.^ 

The  effect  of  a  disclaimer  is  to  vest  the  whole  estate  in 
the  trustees  who  accept,*  and  relates  back  to  the  time  of 
the  gift,  and  the  result  is  the  same  as  though  the  individual 
disclaiming  had  never  been  appointed.^  As  to  the  legal 
title  the  exact  effect  is  less  clear,  but  nevertheless  it  is  held 
to  be  devested  by  the  disclaimer.' 

If,  however,  the  trust  instrument  bestowed  an}'  power 
on  all  the  trustees  nominated,  the  disclaimer  of  one  will 
destro}'  the  power,  and  if  a  gift  or  legacy  is  attached  to  the 
office  it  will  be  lost  bj'  a  disclaimer ; ''  but  a  gift  which  is 
not  attached  to  the  office  or  conditional  on  its  acceptance 
will  not  be  affected  by  a  disclaimer  of  the  office. 

If  the  individual  were  not  consulted  about  the  appoint- 
ment, he  may  have  the  expense  of  consulting  counsel  and 
his  costs.' 

III.  Acceptance.  —  An  acceptance  should  be  made  for- 
mally according  to  the  provisions  of  the  trust  instrument ;  ® 
but  if  no  manner  is  therein   specified,  if  the  settlement 

1  Daggett  V.  White,  128  Mass.  398. 

2  Lewiu,  p.  214,  §  12.     Perry,  §  264,  end. 

8  In  re  Cunard's  Trusts,  48  L.  J.  (N.  S.)  192;  Carruth  v.  Carruth, 
148  Mass.  431. 

*  Generally  and  by  statute  in  Md.  Pub.  Gen.  Laws  (1888),  Art.  93, 
§§  288,  289. 

6  Ellis  V.  Boston,  H.  &  E.  Railroad.,  107  Mass.  1. 
«  Lewin,  p.  208. 

7  Slaney  v.  Watney,  L.  R.  2  Eq.  418. 

8  In  re  Tryon,  7  Beav.  496. 
»  Ga.  Code  (1895),  §3190. 


THE  TRUSTEE  AS  AN  INDIVIDUAL.  6 

be  by  deed,  then  by  joining  in  the  deed,  or  if  the  trust  be 
established  by  will,  then  by  qualifying  in  the  probate 
court,  and  b^-  statute  a  person  not  so  qualifying  is  held  to 
have  disclaimed,  and  a  new  trustee  msLy  be  appointed.^ 

If  an  individual  be  named  both  executor  and  trustee,  he 
will  be  construed  to  accept  both  offices  if  he  presents  the 
will  for  probate  without  disclaiming  either.^ 

In  absence  of  statute  the  executor  or  administrator 
accepts  the  decedent's  trusts,  and  cannot  disclaim  them ; 
but  by  statute  the  law  is  usually  the  reverse. 

It  is  not  unusual  for  a  will  to  provide  that  the  executors 
shall  manage  certain  estates,  and  hold  them  in  trust  for 
certain  purposes.  In  such  cases  the  executors  act  as  and 
really  are  trustees  to  that  extent,  and  not  executors,  and 
should  be  qualified  as  trustees  as  well  as  executors,  al- 
though in  practice  they  often  qualify  as  executors  only. 
In  some  jurisdictions  the  sureties  on  the  executors'  bond 
will  not  be  liable  for  his  acts  as  trustee,  but  in  other  States 
they  will.' 

An  acceptance  will  be  implied  if  the  individual  inter- 
meddles with  the  trust  property,  or  performs  an3'  act  to 
carry  out  the  trust.*  Hence,  if  a  disclaimer  is  contem- 
plated, care  should  be  taken  to  avoid  any  assumption  of 
authoritj',  or  voluntary  interference  with  the  trust  estate, 
either  as  volunteer  or  agent,  until  the  disclaimer  has  for- 
mally been  made ;  since  such  assumption  or  interference 
will  readily  be  construed  as  an  acceptance.  And  a  trustee 
who  has  acted  as  such  cannot  disclaim,  even  though  the 
deed  needed  his  signature  and  he  has  not  signed.*  He 
may,  however,  prove  that  the  act  from  which  an  accept- 
ance would  be  implied  was  done  as  agent,  or  was  merely 
to  protect  the  property  until  a  trustee  could  be  appointed," 

1  Mass.  Pnb.  Stat.,  ch.  141,  §  18.     Supra,  p.  3. 

2  Flint,  §  157.     Supra,  p.  3.  »  Infra,  p.  12. 
♦  Kilbee  v.  Sneyd,  2  Molloy,  186. 

6  Flint  V.  Clinton  Co..  12  N.  H.  432. 

>  Smith  V.  Knowles,  2  Grant's  Cases,  413. 


6  A  trustee's  hajstdbook. 

or  that  he  acted  in  some  other  capacity  than  that  of  trus- 
tee, aud  in  that  case  disclaim  ;  but  the  burden  of  proving 
it  will  be  on  hina. 

The  estate  vests  in  a  transferee  subject  to  disclaimer,* 
therefore  if  an  appointment  be  known  of  and  not  disclaimed 
within  a  reasonable  time,  an  acceptance  will  be  implied ; 
and  the  burden  will  fall  on  the  appointee  to  show  that  he 
had  no  reasonable  opportunity  to  disclaim. 

IV.  Appointment.  —  No  trust  will  be  allowed  to  fail  for 
want  of  a  trustee,^  and  if  conveyance  is  made  to  one  that 
cannot  act,  or  if  those  who  have  been  nominated  disclaim, 
or  if  all  the  trustees  die,  the  property  will  be  held  by  who- 
ever may  have  the  title  until  a  proper  trustee  can  be 
appointed. 

In  case  of  need  the  court  will  appoint  a  temporary 
trustee  or  a  receiver,*  and  may  in  certain  contingencies 
administer  the  trust  itself,  though  such  a  course  is  very 
unusual.* 

The  power  to  make  an  appointment  will  arise  whenever 
the  circumstances  make  it  necessary-,  either  in  the  nature 
of  things,  as  in  the  case  of  the  death  or  disclaimer  of  all 
the  trustees,  or  whenever  the  provisions  of  the  trust  in- 
strument prescribe  it.  As  when  the  number  of  trustees 
sinks  below  the  prescribed  number,^  or  a  trustee  becomes 
disqualified  b}'  going  abroad,  or  as  it  may  be  otherwise 
provided  in  the  instruments,  or  when  the  safety-  of  the 
fund  or  the  proper  administration  of  the  trust  requires 
an  additional  trustee. 

But  the  power  of  appointment  under  the  trust  instrument 
will  only  arise  under  the  exact  terms  specified  therein,  and 

^  Adams  v.  Adams,  21  Wall.  185. 

2  North  Adams  Universalist  Soc.  v.  Fitch,  8  Gray,  421 ;  Dodkin 
».  Brunt,  L.  R.  6  Eq.  580;  Civil  Code  Cal.  (1885),  §  2289  ;  Comp.  Laws 
Dak.  (1887),  §  3959;  Code  No.  Dak.  (1895),  §  4302.  See  to  the  con- 
trary In  re  Stnrges,  59  N.  Y.  S.  783. 

8  Brightly 's  Dig.  Pa.  (1894),  p.  2030,  §  18. 

*  Rogers  v.  Rogers,  111  N.  Y.  228.     Infra,  p.  142. 

*  Mass.  Gren.  Hosp.  v.  Amory,  12  Pick.  445. 


THE  TRUSTEE  AS  AX  LNDIVIDUAIj.  7 

will  not  arise  under  similar  terms ;  as,  for  instance,  a  pro- 
vision that  a  trustee  shall  be  appointed  on  one  of  the 
trustees  becoming  "incapable,"  will  not  give  rise  to  a 
power  to  appoint  when  one  becomes  bankrupt  and  there- 
fore "unlit"  but  still  "capable";^  or  in  the  case  where 
the  power  to  appoint  arose  on  the  refusal  and  neglect  of  the 
original  trustee  to  execute  the  trusts,  and  he  died  without 
executing  them,  the  power  did  not  arise.'^ 

Ho'w  the  Trustee  is  appointed.  —  If  the  trust  instrument 
adequately  provides  a  method  to  be  pursued  in  making 
the  appointment  of  a  trustee,  the  court  has  no  jurisdiction 
in  the  case,  and  the  method  prescribed  must  be  carefully 
followed  ;  but  if  it  becomes  impossible  to  follow  the  method 
prescribed,  the  power  is  wholly  lost,  aud  the  appointment 
must  be  made  by  the  court.®  As  a  matter  of  precaution, 
an  appointment  made  under  a  power  in  a  settlement 
should  be  recorded  with  the  settlement. 

In  some  States  the  power  to  appoint  the  trustee  is  given 
by  statute  to  the  beneficiary,  and  in  others  to  the  surviving 
trustee,  but  usually  to  the  court. 

If  the  trust  is  under  a  will,  the  Probate  Court  has  juris- 
diction of  the  estate  and  the  appointment,  even  if  made 
under  the  terras  of  the  will,  according  to  the  prevailing 
statutory  law,  must  be  confirmed  by  a  decree  of  the  court, 
and  a  letter  issued,  although  the  trustee's  powers  in  such 
cases  come  from  the  settlement,  and  not  the  court.* 

The  same  is  true  if  the  trust  be  under  the  jurisdiction  of 
the  court  for  an}'  reason.^ 

If  for  any  reason,  either  to  fill  a  vacancy,  or  for  the 
security  of  the  fund,  or  convenience  of  the  beneficiaries, 

1  Turner  v.  Maule,  15  Jur.  761. 

*  Guion  V.  Pickett,  42  Miss.  77 ;  Underbill,  p.  400,  n.  2. 

«  See  statutes.    Griswold  v.  Sackett,  21  R.  I.  210.    Infra,  p.  50. 

*  The  appointment  of  any  voluntary  trustee  may  be  conlirraed  by 
court  in  Maine.     Rev,  Stat.  (1883),  ch.  68,  §  15. 

<>  In  Maine  a  tnut  may  be  confirmed  by  court,  and  thua  come  (uider 
its  jurisdiction.    Rev.  Stat.  Me.  (1883),  ch.  68,  §§  15,  16. 


8  A  trustee's  HAiTOBOOK. 

the  appointment  of  a  trustee  is  desirable,  and  the  trust 
instrument  does  not  contain  an  adequate  provision  for 
appointing  the  trustee,  or  if  the  person  holding  the  power 
to  appoint  a  trustee  unreasonably  refuses  or  neglects  to 
act,  the  court  will  appoint  a  trustee  upon  the  application 
of  an}'  person  interested  in  the  trust,  whether  in  possession 
or  remainder,^  though  it  would  not  take  any  notice  of  the 
application  of  a  stranger. 

All  persons  in  interest  must  be  parties  to  the  suit,^  but 
less  parties  are  required  in  some  jurisdictions  by  statute.^ 

Ordinaril}',  jurisdiction  in  these  matters  is  conferred  on 
the  Probate  Court  b}*  statute  ;  but  in  the  absence  of  stat- 
ute any  court  of  chancery  or  equity  will  have  jurisdiction 
among  its  ordinary-  powers. 

The  court  will  have  jurisdiction  and  can  appoint  a 
trustee  if  the  person  who  holds  the  title  to  the  property 
is  within  its  jurisdiction,  or  if  the  property  itself  is  within 
its  jurisdiction  and  there  is  a  statute  by  which  the  title 
will  vest  in  the  new  trustee  appointed.*  In  the  absence 
of  such  statute  there  is  no  way  of  vesting  tlie  title,  and 
the  court  is  powerless.  The  operation  of  the  statute  is  to 
confiscate  the  title  of  the  person  out  of  the  jurisdiction, 
and  vest  it  in  the  appointee  of  the  court.'' 

It  is  held  that  the  court  having  original  jurisdiction  of 
a  testamentary  trust  may  make  a  subsequent  appointment, 
although  the  property  and  holder  of  the  title  are  both  out 
of  the  jurisdiction,®  but  it  is  hard  to  see  what  effect  the 
decree  can  have  unless  the  trustee  be  aided  by  statute  or 
be  reappointed  in  the  jurisdiction  where  the  property  lies. 
Statutes  exist  in  some  jurisdictions  which  authorize  trus- 

1  Statutory  provisions  in  most  jurisdictions. 

2  Shaw  V.  Paine,  12  Allen,  293.  In  New  York  the  proceeding  was 
considered  as  being  in  rem  and  valid  without  any  parties.  Milbank  v. 
Crane,  25  How.  Prac.  193  ;  Wood  v.  Travis,  54  N.  Y.  S.  60. 

8  Pub.  Gen.  Laws  Md.  (1888),  Art.  16,  §  212. 
*  McCann  v.  Randall,   147  Mass.  81.    See  infra,  p.  140.    Annot. 
Stat.  Col.  (1891),  §  2535 ;  Gen.  Stat.  N.  J.  (1895),  p.  394.  §  112. 

»  McCaun  v.  Randall,  147  Mass.  81 .        «  Curtis  v.  Smith,  60  Barb.  9, 


THE  TBXJSTEE  AS  AliT  INDIVIDUAL.  9 

tees  appointed  in  other  States  to  recover  trust  property  in 
tlie  State  where  the  statute  exists.^ 

So  too  by  statute,  where  the  sole  beneficiary  has  moved 
into  a  State  and  wishes  the  property  there  also,  the  court 
may  appoint  a  ti-ustee ;  but  this  case  seems  open  to  the 
same  criticism  as  the  foregoing.^ 

No  attempt  will  be  made  to  state  the  rules  of  procedure 
in  such  cases,  since  the  matter  is  one  of  practice,  though 
simple,  requiring  care  and  professional  advice,  as  the 
consequences  of  administering  a  trust  under  a  defective 
appointment  may  be  serious,  since  the  outgoing  trustee 
is  not  relieved  and  is  still  liable  for  the  trust,  and  the 
incoming  trustee  is  acting  wrongfully  as  trustee,  and  may 
incur  heavy  liabilities  without  any  right  to  indemnity  out 
of  the  trust  estate,  and  may  be  estopped  to  deny  the  regu- 
larity of  the  appointment,  (a) 

Appointment  not  Complete  without  Title  to  Property. 

—  The  appointment  of  a  trustee  is  not  complete  until  the 
title  to  the  trust  property  is  vested  in  him.  The  original 
trustees  under  a  will  get  title  to  the  real  estate  from  that 
instrument  itself,  but  do  not  get  title  to  the  personal 
estate  until  it  is  turned  over  by  the  executors,  usually 
after  a  considerable  interval. 

The  original  trustees  under  a  deed  will  have  the  prop- 
erty vested  in  them  by  the  conveyance. 

The  property  ordinarily  vests  in  later  appointees  by  ex- 
press provisions  of  the  trust  instrument,  which  commonlj' 
provides  that  on  the  appointment  of  a  new  trustee  he  shall 
become  entitled  to  and  vested  with  the  trust  property ; ' 
but  in  order  that  the  title  shall  pass  under  the  terms  of 
the  instrument,  all  the  prescribed  conditions  concerning 
the  appointment  must  have  been  accurately  fulfilled.* 

1  Ky.  Stat.  (1894),  §§  4709,  4711  ;  Gen.  Stat.  N.  J.  (1895),  p.  3685, 
S  9;  Code  Va.  (1887),  §  2630;  Code  W.  Va.  (1891),  p.  680,  §  4. 

2  Code  Ala.  (1896),  §  4200. 

»  Ellis  V.  Boston,  H.,  &  Erie  Railroad,  107  Mass.  1. 
*  Bamgarner  v.  Cogswell,  49  Mo.  259. 
(a)  Wagnon  i-.  Pease,  104  Ga.  417. 


10  A  trustee's  handbook. 

la  many  jurisdictions  the  property  will  vest  in  the  new 
trustee  by  statutory  provision ;  ^  but  this  vesting  of  title  is 
usually  confined  to  appointees  of  the  court ;  ^  and  even 
where  the  donee  of  the  power  is  the  Judge  of  Probate,  the 
appointment  being  that  of  the  individual  and  not  of  the 
court,  the  title  will  not  pass  under  the  statute.* 

Where  there  is  no  adequate  provision  in  the  trust  in- 
strument and  no  statute  applicable,  conveyance  must  be 
made  by  whoever  holds  the  title ;  *  and  where  the  court 
appoints,  a  well  drawn  decree  will  contain  an  order  for 
the  necessary  conveyance.^ 

Trustees'  Bonds.  —  Trustees  under  wills,  and  usually 
trustees  appointed  by  the  court,  are  required  to  give  bond 
to  the  court  for  the  faithful  performance  of  their  trust,' 
and  the  court  may  require  an  appointee  under  a  power  in 
the  instrument  to  give  bond  if  the  circumstances  require 

In  testamentary  trusts  these  bonds  are  required  to  be 
with  sureties,  unless  the  testator  has  expressly  excused 
the  trustee  from  furnishing  them,  or  unless  all  parties 
in  interest  join  in  requesting  the  exemption.  In  such 
cases  "all  persons  beneficially  interested"  refer  only  to 
persons  in.  being  and  who  have  a  present  vested  interest 

1  Perry,  §  284,  n.  6;  Mass.  Pub.  Stat.  (1882),  ch.  141,  §  6;  Laws 
Del.  (1893),  p.  709,  ch.  250,  and  p.  709,  ch.  95  ;  Gen.  Stat.  R.  I.  (1896), 
ch.  208,  §  4;  Brightly's  Dig.  Pa.  (1894),  p.  2030,  §  26;  Rev.  Stat. 
Mo.  (1889),  §  8684;  Gen.  Stat.  Conn.  (1888),  §  492  ;  Gen.  Stat.  N.  J. 
(1895),  p.  3684,  §  4. 

2  Pub.  Gen.  Laws  Md.  (1888),  Art.  16,  §  208;  Gen.  Stat.  Kan.  (1889), 
§  7168;  Stat.  Minn.  (1894),  §  4297  ;  Annot.  Stat.  Wis.  (1889),  §  2094. 

*  Webster  Bank  v.  Eldridge,  115  Mass.  424,  amended  by  Stat. 
1878,  c.  254,  §  1,  so  as  to  vest  title  in  appointees  under  any  written 
instrument. 

*  Loring  v.  Salisbury  Mills,  125  Mass.  138,  141. 

6  Rev.  Laws  Vt.  (1894),  §  2612;  Rev.  Stat.  Me.  (1883),  ch.  68; 
§§  6,  7.     For  further  discussion  see  pp.  43,  44,  infra. 

*  Statutes  in  nearly  all  jurisdictions. 
^  Bow  ditch  V.  Banuelos,  1  Gray,  220. 


THE  TRUSTEE  AS  AN  IKDIYTDUAIi.  11 

in  the  estate,  and  not  to  persons  unascertained  and  not  in 
being.^ 

It  is  not  unusual  for  a  trustee,  especially  if  he  be  a  man 
of  standing,  to  decline  a  trust  where  he  is  required  to  fur- 
nish security ;  and  the  wiser  course  seems  to  be  to  select 
the  trustees  with  care,  and  trust  to  the  carefulness  of  the 
selection,  rather  than  to  take  a  less  desirable  individual 
with  security,  since  continual  watchfulness  is  required  to 
be  sure  that  the  security  remains  sufficient  and  that  no  de- 
preciation is  occurring,  and  bondsmen  are  difficult  to 
collect  from. 

The  amount  of  the  bond  required  is  sufficient  to  cover 
with  a  margin  of  fifty  per  cent  the  personal  property-  in 
the  trustee's  hands,  and,  if  there  is  a  power  of  sale  of  real 
estate  in  the  settlement,  sufficient  to  cover  the  value  of 
the  real  estate  also. 

A  trustee  who  has  not  furnished  sureties  may  be  re- 
quired to  do  so,  if  at  a  later  time  the  court,  on  application 
of  any  one  in  interest,  considers  it  necessary  for  the  safety 
of  the  fund. 

When  the  court  orders  a  sale  of  real  estate  it  will  ordi- 
narily order  the  trustee  to  file  a  bond  sufficient  to  cover 
the  price  received,  if  such  a  bond  has  not  already  been 
given. 

V.  "WTio  ia  Trustee.  —  The  question  of  who  is  the  trus- 
tee and  who  is  to  administer  the  trusts  not  unfrequently 
arises. 

Any  person  who  intermeddles  with  the  trust  property  is 
a  trustee  de  son  tort,  and  is  accountable  as  such  to  the 
same  extent  as  though  he  were  duly  appointed.''  As,  for 
instance,  the  executor  or  administrator  of  a  deceased  trus- 
tee, or  an  executor  administrator  who  meddles  with  the 
real  estate  of  the  deceased.' 

*  Dexter  v.  Cottingr,  149  Mass.  92. 

*  Brown  v.  Lambert's  Adm'r,  74  Va.  256. 

«  Perry,  vol.  1,  §§  245-247,  and  cases  cited.  Penn  v.  Folger,  182 
111.  76. 


12  A  trustee's  haiidbook. 

An  executor  who  has  the  duties  of  a  trustee  conferred 
on  him  by  the  will,  as  for  instance  the  payment  of  an 
annuity  out  of  part  of  the  estate,  even  though  he  qualifies 
as  executor  only,  has  in  regard  to  that  property  the 
powers  he  would  have  if  he  qualified  as  trustee.^  That  is 
to  sa}-,  though  the  trustee  calls  himself  an  executor,  if  in 
fact  he  acts  as  trustee  he  Is  a  trustee,  and  not  an  executor, 
in  the  eyes  of  the  law.  In  Alabama,  Massachusetts,  and 
Maine  the  sureties  on  his  bond  as  executor  are  liable  for 
his  acts  as  trustee,^  but  the  rule  is  otherwise  elsewhere.' 

Where  the  same  person  is  appointed  executor  and  trus- 
tee under  a  will,  he  holds  the  property  as  executor  until  he 
has  settled  his  account  in  the  Probate  Court  as  executor, 
crediting  himself  with  any  funds  which  he  holds  as  trustee^ 
or  done  sotne  other  notorious  act  of  transfer.* 

Where  a  power  of  appointment  is  given  by  the  trust 
instiiiment  and  the  donee  appoints  new  trustees,  the  sec- 
ond set  of  trustees  in  point  of  time  will  not  necessarily 
administer  the  trust ;  ^  but  if  the  property*  be  given  to  the 
second  set  to  convert,  or  their  discretion  is  relied  on,  they 
will  take  the  property*, ^  and  it  is  immaterial  whether  the 
trusts  can  be  carried  out  or  not.'' 

Where  a  general  power  of  appointment  is  exercised  by 
will,  the  executors  of  the  will,  not  the  trustees,  will  carry 
out  the  trust,  and  whex-e  the  power  is  special  the  same 
rule  should  prevail  unless  the  appointment  is  directly  to 
the  objects  of  the  bounty  and  was  not  meant  to  pass 
through  the  executor's  hands.^ 

1  Wheeler  v.  Perry,  18  N.  H.  307  ;  Carson  v.  Carson,  6  Allen,  397  ; 
Sheets's  Estate,  52  Pa.  St.  257. 

2  White  v.  Ditson,  140  Mass.  351  ;  Groton  v.  Rnggles,  17  Me.  137 ; 
Hall  V.  Gushing,  9  Pick.  395  ;  Perkins  v.  Moore,  16  Ala.  9. 

8  Drake  v.  Price,  5  N.  Y.  430. 

♦  Crocker  v.  Dillon,  133  Ma.«<8.  91,  98.     See  infra,  p.  84. 

*  Ames,  p.  460,  n. ;  Busk  v.  Aldam.  L.  R.  19  Eq.  16. 
6  Onslow  V.  Wallis,  1  Hall  &  Twell,  513. 

^  Philbrick's  Settlement,  34  L.  J.  Ch.  368 ;  Olney  v.  Balch,  154 
Mass.  318. 

8  Sargent  v.  Sargent,  168  Mass.  420. 


THE  TRUSTEE  AS   AN  INDIVIDUAL.  13 

VI.  "Who  can  be  a  Trustee.  —  Any  person  that  has 
the  capacit}-  to  hold  the  title  to  the  property,  and  the 
right  to  exercise  the  powers,  may  be  a  trustee. 

A  corporation  having  such  capacity  and  rights  among 
its  charter  powers  is  such  a  person,  and  may  be  a  trustee.^ 

An  alien  enemy  or  an  alien  in  a  jurisdiction  where  he 
cannot  hold  property  could  not  be  a  trustee.^ 

The  sovereign  may  be  trustee,  but  the  beneficiary  can- 
not enforce  the  trust  except  by  petition,*  until  the  property 
is  conve3ed  to  some  one  amenable  to  the  jurisdiction  of 
the  court.'* 

The  trust  estate  may  vest  in  a  lunatic  or  infant,  but 
they  will  be  removable.®  An  infant  may  be  compelled  to 
convey  by  statute,*  and  so  long  as  infants  or  lunatics  hold 
the  propert}'  the  trust  will  be  administered  by  the  court 
through  them  or  their  guardians.'  Having  no  discretion, 
they  cannot  act  in  trust  affairs  an}'  more  than  they  can  in 
their  own  affairs,*  and  if  one  of  three  trustees  is  an  infant 
or  lunatic,  action  by  the  other  two  is  barred.* 

At  common  law  a^  wife  could  not  be  a  trustee  for  her 
husband,  but  she  may  be  now  in  most  jurisdictions  under 
the  statutory  rules. ^* 

A  trustee  should  be  "  capable,"  that  is  to  sa}',  a  person 
having  the  legal  and  actual  capacity  to  hold  the  title  to 
the  trust  property  and  exercise  the  powers.  Thus  the  trus- 
tee should  be  a  person  of  full  age  and  sound  discretion. 

He  should  be  "  fit,"  that  is  to  say,  a  person  in  whose 

1  Attorney  General  v.  Landerfield,  9  Mod.  286 ;  Dublin  Case,  38 
N.  H.  577. 

2  King  V.  Boys,  3  Dyer,  283. 

8  Briggs  V.  Light  Boat,  11  Allen,  157. 

*  Winona  Co.  v.  St.  Paul  Co.,  26  Minn.  179. 

'  Irvine  v.  Irvine,  9  Wall.  617  ;  Swartwout  v.  Burr,  1  Barb.  495. 
8  Brightly's  Dig.  Pa.  (1894),  p.  2033,  §  46;  Gen.  Laws  R.  I.  (1896), 
ch.  208,  §  16 ;  Gen.  Stat.  N.  J.  (1895),  p.  3683,  §§  2,  3. 
^  Ex  parte  Sergison,  4  Ves.  Jr.  147. 

*  Person  p.  Warren,  14  Barb.  488. 

»  King  V.  Bellord,  1  Hem.  &  M.  343.    /n/ra,  p.  48, 
w  Schlater  v.  Bowery  Savings  Banks,  117  N.  Y.  125. 


14  A  trustee's  handbook. 

hands  the  property  will  be  safe,^  and  who  will  be  impar- 
tial in  the  administration  of  his  trust.  Thus  a  bankrupt 
is  not  a  "fit"  person,  as  being  unsuccessful  in  his  own 
affairs  he  is  not  likelj'  to  be  successful  in  those  of  others, 
and  a  drunkard  or  person  of  dishonest  or  of  bad  character 
is  unfit,  since  the  property'  would  not  be  safe  in  his  hands. 

So  too  a  beneficiary  is  an  unfit  person,  whether  he  be  a 
life  tenant  or  remainderman,  since  he  will  naturally  be 
partial  to  his  own  interests ;  ^  and  for  similar  reasons  a 
near  relation  is  objectionable,  although  in  this  country 
they  are  more  often  appointed  than  strangers.  The  fact 
of  near  relationship  makes  the  trustee  less  able  to  withstand 
the  importunities  of  their  beneficiaries,^  and  moreover  such 
a  connection,  especially  where  a  parent  or  older  relation  is 
trustee  for  a  child,  is  too  often  made  an  excuse  for  lax 
management,  and  the  knowledge  that  a  breach  of  trust  is 
likely  to  be  condoned  not  infrequently  leads  to  disregard 
of  strictlj-  legal  management,  which  is  the  only  safeguard 
of  trust  estates.  Deviation  from  the  rules  of  strict  ac- 
countability only  too  often  leads  to  speculation  and  the 
loss  of  the  property. 

A  court  will  not  appoint  a  husband  trustee  for  his  wife,* 
and  there  is  no  resulting  trust  between  husband  and  wife  ;  ^ 
but  there  is  nothing  in  the  relationship  of  husband  and  wife 
absolutelj-  preventing  the  appointment,'  and  the  maker  of 
the  trust  may  make  such  an  appointment.  But  where  a 
husband  is  trustee  for  his  wife,  her  equitable  estate  is  sup- 
posed to  be  reduced  to  possession,  and  may  be  attached 
for  his  debts.'' 

1  In  re  Barker's  Trnsts,  1  Ch.  D.  43. 

2  Ex  parte  Conybeare's  Settlement,  1  Weekly  Rep.  458. 

'  Wilding  V.  Bolder,  21  Beav.  222  ;  Parker  v.  Moore,  2.5  N.  J.  Eq. 
228,  240. 

*  Dean  v.  Lauford,  9  Rich.  Eq.  423. 

*  Jencks  v.  Alexander,  11  Paige,  619. 

*  Porter  v.  Bank  of  Ratlaud,  19  Vt.  410;  Livingston  v.  Livingston, 
2  Johns.  Ch.  537. 

'  Shirley  v.  Shirley,  9  Paige,  363. 


THE  TRUSTEE  AS   AN  INDIVIDUAL.  15 

In  this  connection  it  may  be  said  tliat  the  trust  com- 
panies, which  have  of  late  jears  become  so  numerous,  to  a 
considerable  extent  do  away  with  the  element  of  personal 
risk  attaching  to  an  individual  trustee ;  but  they  lack  the 
advantages  of  personal  management.  These  companies 
sometimes  fail  from  improper  management  as  utterly-  as 
individuals  do,  and  as  a  rule  the  lack  of  personal  manage- 
ment results  in  securing  the  minimum  return  onl}-  on  the 
amount  invested,  and  lacks  the  great  advantages  often 
secured  by  the  able  personal  oversight  of  individual 
trustees. 

VII.  Appointment  of  Trustee.  —  The  maker  of  the 
trust  in  making  his  appointment  is  bound  only  by  the 
consideration  of  the  legal  capacit}'  of  the  individual,  and 
may  appoint  a  person  actually  incapable  or  unfit,  and  his 
appointee  will  be  removed  for  cause  onl}.^ 

The  donee  of  a  power  to  appoint  may  also  use  his 
discretion  in  determining  the  fitness  and  actual  capacity 
of  the  appointee ;  but  the  power  is  not  an  arbitrary  one, 
and  if  the  appointment  be  of  an  unfit  or  incapable  person 
the  court  may  review  it.'^ 

If  the  holder  of  the  power  be  himself  a  trustee,  he  should 
consult  his  beneficiaries  and  appoint  some  one  agreeable  to 
them  ; '  and  should  the  matter  of  the  appointment  become 
a  matter  of  litigation,  the  power,  though  discretionary, 
cannot  be  exercised  without  the  assent  of  the  court. 

"Where  the  court  is  called  upon  to  appoint  a  trustee,  it 
will  appoint  only  a  person  who  is  actually  and  legally 
capable  and  fit,  and  within  its  jurisdiction  ;  *  but  it  will 
have  due  regard  to  the  wishes  of  the  maker  of  the  trust 
if  they  can  be  discovered.^ 

>  Wetmore  v.  Truslow.  51  N.  T.  338. 
2  Shaw,  C.  J.,  in  Bowditch  v.  Banuelos,  1  Gray,  220,  231. 
«  Perry,  §  297. 

«  Rev.' Stat.  Ind.  (1894),  §  3410. 

'  In  re  Tempest,  L.  R.  1  Ch.  485,  487.  See  Perry,  §  39 ;  Story,  Eq. 
Jur.,  11th  ed.,  vol.  2,  §  1289b;  Underhill,  p.  408. 


16  A  trustee's  handbook. 

In  some  cases  the  court  will  appoint  a  non-resident  where 
the  beneficiaries  or  part  of  the  property  is  out  of  its  juris- 
diction.^ In  some  jurisdictions  it  is  forbidden  to  do  so  by 
statute,*  but  the  statutes  have  been  held  unconstitutional.^ 

If  all  the  beneficiaries  agree  on  a  person,  the  court  will 
nearly  always  appoint  him,  even  though  he  be  a  beneficiarj' 
or  otherwise  unfit.* 

The  laws  of  some  States  provide  for  a  public  trustee, 
who  will  be  appointed  whenever  the  beneficiarj'  shows  that 
his  trustee  is  absent  from  the  countrj-  or  refuses  to  act.'' 

The  regularity  of  the  appointment  by  the  court  cannot 
be  questioned  in  any  collateral  proceeding.' 

VIII.  Devestment  of  Office.  —  A  trustee  is  discharged 
(1)  by  extinction  of  the  trust,  (2)  by  completion  of  his 
duties,  (3)  b}'  such  means  as  the  instrument  contemplates, 
(4)  b}'  consent  of  the  beneficiaries,  (5)  b}'  judgment  of  a 
competent  court. "^ 

The  trustee's  office  may  come  to  an  end  by  the  extinc- 
tion of  the  trust.  This  may  come  to  pass  either  by  the 
completion  of  the  purposes  of  the  trust,*  as,  for  instance, 
on  the  death  of  the  life  tenant  and  the  vesting  of  the 
estate  in  the  remainderman,®  or  in  the  case  of  a  trust  to 
enable  a  widow  to  support  her  children,  on  the  remarriage 
of  the  widow,^°  or  by  the  legal  title  and  beneficial  title 
merging  in  one  person." 

1  Ames,  250,  n. ;  Brightly's  Dig.  Pa.  (1894),  p.  2039,  §  84. 

2  Rev.  Stat.  Ind.  (1894),  §  3410. 

8  Glink  V.  La  Fayette,  52  Fed.  Rep.  857. 

*  Young  V.  Young,  4  Cranch  C.  C.  499. 

6  Annot.  Stat.  Col.  (1891),  §§  4557-4559. 
8  McKim  V.  Doane,  137  Mass.  195. 

'  Comp.  Laws  Dak.  (1887),  §  3955;  Rev.  Code  N.  Dak.  (1895), 
§4298;  Civ.  Code  Cal.  (1885),  §  2282. 
8  Ex  parte  Stone,  138  Mass.  476. 

*  Morgan  v.  Moore,  3  Gray,  319. 
10  Fox  V.  Storrs,  75  Ala.  265. 

^  Parker  v.  Converse,  5  Gray,  336. 


THE  TRUSTEE  AS  AN  INDIVIDUAL.  17 

If  the  trust  itself  continues  and  the  trustee  dies,  or  is 
under  a  natural  disability,  or  one  created  by  the  trust  in- 
strument, if  there  be  more  than  one  trustee,  the  oflSce  will 
vest  in  the  surviving  or  remaining  trustees,  even  though 
there  be  a  provision  in  the  instrument  for  keeping  up  the 
number  of  the 'trustees.^ 

If  he  is  disabled,  the  title  will  remain  in  him  until  a 
new  trustee  is  appointed,  and  the  powers  will  be  suspended 
or  vested  in  the  court. 

If  a  sole  trustee  dies,  then  in  absence  of  statute  his 
executor  or  administrator  accepts  his  trusts  and  at  com- 
mon law  cannot  disclaim  them,  though  in  some  States  he 
may  disclaim  by  statutory  provision.  In  many  States  the 
statute  provides  that  the  executor  or  administrator  does 
not  succeed  to  the  decedent's  trusts,  and  in  such  cases  the 
office  vests  in  the  court,  (a)  or  is  in  abeyance,  and  will  vest 
in  a  successor  when  appointed ;  the  person  in  whom  the 
title  to  the  property  has  vested  in  the  meanwhile,  not  hav- 
ing the  office  of  trustee  in  anvthing  but  a  limited  extent, 
namel}',  to  preserve  the  property  and  act  in  an  emergency 
to  prevent  a  loss,  and  finally  convey  to  the  new  trustee 
when  appointed.^ 

It  is  the  dnt}'  of  the  executor  or  administrator  of  a  de- 
ceased trustee  to  settle  the  decedent's  trust  accounts,  and 
his  estate  is  liable  for  breaches  of  trust  committed  in  his 
lifetime.' 

The  guardian  of  an  insane  person  would  stand  in  the 
same  position  as  the  executor  of  a  deceased  trustee. 

The  trustee  cannot  abandon  his  trust,  and  even  if  he 
convej-s  away  the  property  he  will  still  remain  liable  as 
trustee;*  but  he  may  resign.' 

1  "Warhurton  v.  Sandys,  14  Sim.  622, 

2  Mortimer  i;.  Ireland,  11  Jurist,  721  ;  Ames,  510,  n.    Infra,  p.  45. 
«  Dodd  V.  Wilkinson,  41  N.  J.  Eq.  566 ;  Perry,  §  344. 

*  Webster  v.  Vandeventer,  6  Gray,  428. 
«  Mass.  Pnb.  Stat.  (1882),  ch.  141,  §  10. 
(a)  Milbank  v.  Crane,  25  How.  Prac.  193. 
2 


18  A  TRUSTEE'S  HANDBOOK. 

Resignation. — The  resignation  in  most  jurisdictions  may 
be  at  pleasure,^  and  in  any  jurisdiction  for  good  reason.* 

To  be  effective,  the  resignation  must  be  made  either  ac- 
cording to  an  express  provision  of  the  trust  instrument,  (a) 
or  with  the  assent  of  all  the  beneficiaries  or  the  court.  ^ 

The  assent  of  the  beneficiaries  must  be  unanimous ; 
hence,  if  some  are  under  age,  unascertained,  unborn,  or 
incompetent,  a  valid  assent  cannot  be  given  bj'  the  bene- 
ficiaries, and  resort  must  be  had  to  the  court. 

The  mere  resignation  and  acceptance  thereof  will  not 
conve}'  the  title  to  the  property,  but  the  trustee  should 
then  devest  himself  of  the  property  by  suitable  conve}'- 
ances,  and  complete  his  duties,  and  until  he  does  so  he 
will  remain  liable  as  trustee.* 

Even  where  all  persons  in  interest  assent,  it  has  been 
suggested  that  the  resignation  is  not  complete  w'ithout  the 
action  of  the  court,®  but  it  is,  to  say  the  least,  doubtful ; 
and  especially  as  all  persons  who  are  likely  to  raise  the 
question  are  concluded  b}'  their  assent. 

The  resignation  need  not  be  in  writing,  and  where  a 
trustee  has  conveyed  the  trust  property  to  a  successor  ap- 
pointed by  the  court,  there  being  no  evidence  of  any  direct 
resignation,  one  would  be  presumed.* 

Ordinai'ily  courts  of  probate  have  jurisdiction  in  these 
matters ;  but  where  it  is  not  specially  given  to  them,  a 
court  of  equity  will  have  the  power  to  accept  a  resignation 
among  its  ordinary  powers,  and  generally  has  concurrent 
jurisdiction  where  the  probate  court  has  the  power.' 

The  court  will  not  accept  a  resignation  until  the  retiring 

1  Bogle  V.  Bogle,  3  Allen,  158  ;  Ellis  v.  Boston,  H.,  &  E.  Railroad, 
107  Mass.  1 ;   Statutes,  passim. 

2  Craig  V.  Craig,  3  Barb.  Ch.  76 ;  Dean  v.  Lanford,  9  Rich.  Eq. 
(S.  C.)  423. 

8  Cruger  v.  Halliday,  11  Paige,  314. 

*  Ibid. 

6  Matter  of  Miller,  15  Abb.  Pr.  277. 

*  Thomas  v.  Higham,  1  Bail.  Eq.  222. 
1  Bowditch  V.  Banuelos,  1  Gray,  220. 
(a)  Stearns  v.  Fraleigh,  39  Fla.  603. 


THE  TRUSTEE  AS  AN  INDIVIDUAL.  19 

trustee  has  settled  his  account,*  and  returned  any  benefit 
connected  with  the  office,^  and  in  some  jurisdictions  they 
will  require  a  successor  to  be  provided  for.' 

Where  there  is  more  than  one  trust  in  the  same  instru- 
ment, the  rule  for  resignation  is  the  same  as  for  accept- 
ance ;  viz.  unless  the  trusts  are  divisible,  all  or  neither 
must  be  resigned.* 

Removal.  —  The  court  may  remove  a  trustee  for  good 
cause  ;  *  but  the  application  is  addressed  to  the  reasonable 
discretion  of  the  court,^  and  each  case,  therefore,  stands 
on  its  own  merits.'  The  power  is  among  the  ordinary 
powers  of  a  court  of  equitj^,^  but  jurisdiction  in  such  cases 
is  generally  given  to  the  probate  courts  by  statute,  and 
action  should  always  be  taken  in  the  court  having  original 
jurisdiction  of  the  trust.' 

All  persons  interested  in  the  trust  must  be  made  parties 
in  a  suit  for  a  removal.'"'  But  this  is  not  required  where 
the  parties  are  very  numerous,  as,  for  instance,  in  a  rail- 
road mortgage,  (a) 

Ordinarily  a  trustee  will  be  removed  who  refuses  to 
give  bond,"  or  who  has  been  guilty  of  a  wilful  breach  of 

1  Statutes,  passim.    In  re  Olmstead,  24  App.  Div.  (N.  Y.)  190. 

2  Craig  V.  Craig,  3  Barb.  Ch.  76. 

«  Civ.  Code  Cal.  (1885),  §  2260;  Comp.  Laws  Dak.  (1887),  §  3942; 
Rev.  Code  N.  D.  (1895),  §  4285. 

*  Carruth  v.  Carruth,  148  Mass.  431. 

^  Statutes  exist  in  most  jurisdictions  giving  courts  of  probate  juris- 
diction to  act  in  these  matters. 

«  Scott  V.  Rand,  118  Mass.  215. 

^  A  number  of  examples  in  Underbill,  p.  393,  n. 

8  Dodkin  v.  Brunt,  L.  R.  6  Eq.  580.  As  to  who  are  interested,  see 
infra,  p.  131, 

9  Howard  v.  Gilbert,  39  Ala.  726.    Infra,  p.  140. 

10  Shaw  V.  Paine,  12  Allen,  293.  As  to  who  are  interested,  see  infra, 
p.  131. 

"  See  supra,  p.  3,  note  2. 

(a)  Farmers'  Loan  &  Trust  Co.  v.  Lake  Street  Elevated  Railroad, 
68  111.  App.  666. 


20  A  TRUSTEE'S  HANDBOOK. 

trust,  or  who  wastes  or  mismanages  the  trust  property, 
or  who  refuses  to  account,*  or  who  is  a  minor,  lunatic,* 
drunkard,'  or  a  person  of  such  bad  habits  that  the  prop- 
erty is  in  danger  in  his  hands ;  *  and  the  fact  that  he  is 
the  testator's  son  and  has  a  discretionary  power  of  paying 
the  income  will  not  protect  him  if  he  mingles  the  funds 
with  his  own  and  refuses  to  account.^ 

So  too  a  trustee  will  be  removed  who  denies  the  trust 
or  is  unfriendly  to  it,^  who  unreasonably  or  corruptly  dis- 
agrees with  his  co-trustee,'^  or  who,  having  a  discretionary 
power  over  payments  to  his  beneficiaries,  has  an  unreason- 
able prejudice  or  dislike  to  him  which  is  likely  to  defeat 
the  purposes  of  the  settlement,*  or  favors  one  beneficiary 
to  the  prejudice  of  the  others,^  or  whose  relations  with 
his  co-trustee  or  the  beneficiaries  are  such  as  to  interfere 
with  the  proper  management  of  the  estate. ■'° 

The  court  will  remove  sometimes,  though  not  neces- 
sarily, a  trustee  who  becomes  a  bankrupt,^^  or  goes  to 

1  Stated  to  be  the  only  causes  in  Webb  v.  Dietrich,  7  Watts  &  Sar. 
401. 

2  Generally,  but  in  some  States  expressly  by  statute.  Eev.  Stat. 
N.  J.  (1895),  p.  3684,  §  4  ;  Gen.  Stat.  Conn.  (1888),  §  611 ;  Rev.  Stat. 
Me.  (1883),  ch.  68,  §  4  ;  Pub.  Stat.  N.  H.  (1891),  ch.  198,  §  8 ;  Vt.  Stat. 
•(1894),  §  2610;  Pub.  Stat.  Mass.  (1882),  ch.  141,  §  9. 

*  Grenerally ;  but  in  some  States  expressly  by  statute.  Rev.  Stat. 
Ohio  (1890),  §§  6472,  6334;  Brightly's  Dig.  Pa.  (1894),  p.  2035, 
§§  59-61. 

*  The  statutes  existing  in  nearly  all  jurisdictions  generally  ex- 
pressly cover  one  or  more  of  the  above  cases.  They  should  be  referred 
to  in  each  case. 

6  Sparhawk  v.  Sparhawk,  114  Mass.  356. 

«  Irvine  v.  Dunham,  111  U.  S.  327;  Quackenboss  v.  Southwick,  41 
N.  Y.  117. 

'  Infra,  p.  47. 

8  McPhepson  i'.  Cox,  96  U.  S.  404 ;  Wilson  v.  Wilson,  145  Mass. 
490. 

»  Scott  V.  Rand,  118  Mass.  215. 

10  Disbrow  u.  Disbrow,  61  N.  Y.  S.  614.  In  re  Nathans'  Estate,  191 
Penn.  St.  404. 

»  I'addock  u.  Palmer,  6  How.  Pr.  215. 


THE  TKUSTEE  AS  AN  INDIVIDUAL.  21 

reside  permanently  without  its  jurisdiction ;  ^  but  it 
will  not  remove  a  trustee  simply  because  he  is  poor,'-^ 
or  to  satisfy  the  caprice  of  a  beneficiary ; "  or  because 
he  is  prejudiced  against  or  dislikes  a  beneficiary  where 
he  has  no  discretionary  power  over  the  payments  to 
him.*  Nor  will  a  trustee  be  removed  for  the  non-exercise 
of,  or  the  manner  in  which  he  exercises,  a  discretionary 
power,  provided  he  is  honest  and  reasonable  in  the  use  or 
non-use  of  his  discretion.  Nor  will  a  trustee  be  removed 
for  a  technical  breach  of  trust,  or  one  made  unintentionally 
or  through  mistake.^ 

1  Gulp's  Est.,  5  Pa.  C.  C.  R.  582;  Brightly'a  Dig.  Pa.  (1894),  p. 
2037,  §  70;  Hughes  v.  Chicago  Co.,  47  N.  Y.  Sup.  Ct.  531. 

*  Jones  V.  McPhillips,  77  Ala.  314. 
»  McPherson  i'.  Cox,  96  U.  S.  404. 

*  Nickels  i;.  Philips,  18  Fla.  732  ;  Eorster  v.  Davies,  4  DeG.,r.  &  J. 
133. 

'  Feriy,  §§  275  to  287,  and  Underbill,  p.  393,  n.,  for  other  instances. 


PAET    II. 

THE  INDIVIDUAL  AS  TRUSTEE. 

I.    INCIDENTS  OF  TRUST  ESTATE. 

Ownership.  — In  every  trust  there  are  two  estates,  that 
of  the  trustee  or  the  legal  estate,  and  that  of  the  benefi- 
ciary or  the  equitable  estate. 

These  two  estates  are  separate  although  bound  together 
and  travelling  on  parallel  lines,  and  they  will  be  treated 
separately  in  this  treatise ;  the  trustee's  estate  here,  and 
the  beneficiary's  estate  later  on.^ 

The  trustee's  estate  consists  in  the  ownership  of  the 
property  itself,^  and  the  beneficiary's  in  his  right  in  a  court 
of  equity  to  compel  the  trustee  to  carry  out  the  provisions 
of  the  trust,  but  not  in  an}^  estate  in  the  property'  itself. 

The  tendencj'  in  America  is  to  merge  legal  and  equitable 
rights,*  and  for  courts  of  law  to  act  on  equitable  principles. 
Statutes  that  reduce  the  legal  estate  to  a  mere  power,  as 
in  New  York  and  other  Code  States,  and  the  refusal  of  a 
court  of  law  to  allow  trust  property  to  be  sold  on  execu- 
tion, are  examples  of  these  tendencies  that  might  be 
largely  multiplied.* 

Nevertheless  a  trustee  in  either  a  court  of  law  or  equity 
is  the  absolute  owner  of  the  trust  property  as  to  the  whole 
world,  and  may  eject  even  the  beneficiary  from  the  prem- 
ises,* and  is  accountable  to  no  one  in  the  world  but  the 

1  Infra,  p.  130. 

2  By  statutory  enactments  in  most  Code  States. 
8  Lowell,  Transfer  of  Stock,  §  37. 

*  Infra,  p.  42. 

6  Devin  v.  Hendershott,  32  Iowa,  192. 


THE  INDIVIDUAL  AS   TRUSTEE.  23 

beneficiaries  for  his  use  of  the  ownership.^  The  popular 
error  that  the  trustee  is  merely  the  agent  of  the  beneficiary 
expresses  an  entirely  erroneous  and  mischievous  concep- 
tion of  the  trustee's  relationship  to  the  property  and  his 
beneficiar}-.'^  In  a  case  of  agency  the  principal  owns  the 
propertj',  and  the  agent  acts  in  his  name  and  place ;  in  a 
trust  the  trustee  owns  the  property,  acts  in  his  own  name, 
and  the  beneficiary  has  no  property  rights,  but  a  claim 
against  the  trustee  onlj-. 

In  the  case  of  an  agency  the  person  with  whom  the 
agent  contracts  may  sue  his  principals  on  the  contract ;  he 
has  no  such  rights  against  the  beneficiaries  in  a  trust.' 

As  Owner  of  the  Property,  all  the  Incidents  of  Owner- 
ship fall  to  the  Trustee.  — All  actions  against  strangers 
either  in  law  or  equity  for  damage  to  or  loss  of  the  prop- 
erty,* and  all  actions  to  protect  or  recover  it,  must  be 
brought  in  the  name  of  the  trustee.  And  the  trustee  ma}' 
sue  and  be  sued  without  any  joinder  of  the  beneficiaries,® 
where  the  relations  between  the  trustee  and  beneficiary  are 
not  in  question,  and  his  interests  are  adequately  repre- 
sented by  the  trustee ; '  but  in  foreclosure  a  beneficiary 
has  the  right  to  raise  money,  and  so  must  be  joined.''  In 
some  jurisdictions,  as  Alabama,  New  York,  and  South 
Carolina,  beneficiaries  are  bj'  statute  necessarj-  parties.' 

If  the  beneficiary  is  in  the  possession  of  trust  property 
he  may  sue  for  an  injury  to  his  possession  to  the  same 

»  Wetmore  v.  Porter,  92  N.  T.  76. 

2  Beach  v.  Beach,  14  Vt.  28. 

8  Everett  v.  Drew,  129  Ma.ss.  150. 

*  Davis  V.  Charles  River  Branch  Rd.,  11  Cnsh.  506;  Morgan  v.  K. 
P.  Rd.  Co.,  21  Blatch.  134. 

'  Carey  v.  Brown,  92  U.  S.  171.  Generally,  but  expressly  by  statute 
in  many  jarisdictions.     See  infra,  p.  64. 

•  Vetterlein  v.  Barnes,  124  U.  8.  169. 

■^  U.  S.  Trust  Co.  V.  Roche,  41  Hun,  549.     Contra,  Van  Vechten  v 
Terry,  2  Johns.  Ch.  197. 
'  Ames,  261  n. 


24  A  trustee's  hai^dbook. 

extent  as  an}'  other  bailee  of  property  ;  ^  but  as  against  all 
the  world  other  than  the  beneficiary,  the  trustee's  right  to 
possession  is  absolute,  and  cannot  be  questioned. 

If  the  trustee's  right  of  action  is  barred  by  the  statute 
of  limitations,*  or  if  he  lose  his  right  of  action  in  any 
manner,  the  right  is  absolutely  lost,*  and  the  beneficiary 
is  equally  barred  and  has  no  other  rights  which  he  can 
enforce  against  the  property  or  a  stranger.* 

The  trustee,  and  not  the  beneficiarj',  is  entitled  to  vote 
as  stockholder  in  corporations,^  and  the  trustee,  as  an 
owner  of  stock,  is  eligible  as  a  director,  and  the  beneficiary 
is  not.^ 

In  the  absence  of  statute  to  the  contrar}',  the  trustee  is 
personally  liable  as  stockholder  even  beyond  the  extent  of 
the  trust  propert}',^  but  his  liability  is  generally  limited  by 
statute  to  the  extent  of  the  trust  estate.* 

The  trustee  is  personally  liable  on  the  contracts  which 
he  makes  in  respect  to  the  trust  property,  and  if  he  is  not 
bound  nobody  is  bound;®  and  this  fact  emphasizes  the 
difference  between  a  person  acting  as  trustee  who  binds- 

^  As  to  his  rights,  see  infra,  p.  149. 

2  Wych  V.  East  India  Co.,  3  P.  Wms.  309 ;  Walton  v.  Ketchum,  147 
Mo.  209. 

8  Meeks  v.  Olpherts,  100  U.  S.  564 

*  Molton  V.  Henderson,  62  Ala.  426. 

6  Barker  v.  Mercantile  Ins.  Co.,  6  Wend.  509 ;  Lowell,  Transfer  of 
Stock,  §  27  ;  Herron  v.  Marshall,  42  Am.  Dec.  444  and  note. 

*  By  statute  in  most  States. 

'  Ames,  279,  n. ;  Lowell,  Transfer  of  Stock,  §  28 ;  Lewin,  p.  252. 

8  Pub.  Stat.  N.  H.  (1891),  ch.  150,  §20;  Rev.  Stat.  Me.  (1883), 
ch.  46,  §37;  Gen.  Laws  R.  L  (1896),  ch.  180,  §26;  Rev.  Stat.  N.  Y. 
(1896),  p.  1026,  §  54;  Ind.  Stat.  (1894),  §3431 ;  Annot.  Stat.  111.  (1896), 
ch.  32,  §23;  Stat.  Minn.  (1894),  §3419;  Wash.  Code  (1896),  §  2661 ; 
Mont.  Civil  Code  (1895),  §608;  Rev.  Stat.  Wy.  (1887),  §516;  Rev. 
Stat.  S.  C.  (1893),  §  1500,  cl.  1 ;  Rev.  Stat.  Fla.  (1892),  §§  2132,  2172; 
D.  C,  Cooley's  Dig.  (1892),  p.  162,  §  130;  Comp.  Laws  N.  M.  (1884), 
§206;  Annot.  Stat.  Col.  (1891),  ch.  30,  §  495;  Pub.  Gen.  Laws  Md. 
(1888),  Art.  23,  §  66 ;  unless  he  voluntarily  invested  in  it,  N.  Y. 

But  not  personally  on  contract  in  Mutual  Ins.  Co.,  Mass.  Pub.  Stat 
(1882),  ch.  119,  §85. 

»  Taylor  v.  Davis,  110  U.  S.  330. 


THE  INDIVIDirAL  AS  TRUSTEE.  25 

onl}'  himself,  and  one  acting  as  agent  wlio  binds  his 
principal. 

It  is  erroneous  to  suppose  that  the  trustee  limits  his 
liabilit}'  bj'  signing  his  name  "  trustee,"  or  "  as  trustee,"  ^ 
although  his  liability  may  be  limited  by  appropiate  words 
to  the  extent  of  the  trust  estates ;  but  if  he  has  the  power 
to  contract  for  the  benefit  of  the  trust,  and  if  he  properly 
describes  himself  as  trustee,  the  contract  will  bind  the  trust 
effects  in  his  hands  and  those  of  his  successor,  although 
recourse  will  be  had  to  him  in  the  first  instance.^ 

So,  too,  a  trustee  will  be  personally  liable  on  the  cove- 
nants in  a  deed  or  lease,  whether  he  signs  as  trustee  or  not ; 
and  it  is  important  in  this  connection  to  bear  in  mind  that 
there  is  an  implied  covenant  for  quiet  enjoyment  ou  behalf 
of  the  lessor  in  every  lease.' 

Taxation.  —  The  trustee  is  personally  liable  for  taxation. 
In  the  absence  of  statute,  on  the  personal  property  where 
he  resides,  and  on  land  where  the  land  lies ;  *  but  statutes 
are  not  unusual  making  the  personal  tax  payable  where 
the  beneficiary  resides  who  is  entitled  to  the  income. 

When  both  the  trustee  and  beneficiary  are  non-resident, 
the  personal  property'  is  not  taxable  to  any  one.^ 

A  statute  making  the  property  taxable  where  the  bene- 
ficiary lives,  when  neither  the  trustee  nor  the  property'  are 
within  the  State,  is  constitutional.^ 

In  many  jurisdictions  it  is  the  trustee's  duty  to  bring  in 
a  list  of  the  trust  property  for  taxation,  and  in  others  he 
may  do  so.  A  trustee  who  neglects  his  duty  would  be 
personally  liable  for  the  penalt}'  of  his  neglect ;  and  where 
he  neglects  his  opportunity  to  file  a  list,  and  the  property 

1  Infra,  p.  65.  2  T„fra,  p.  65.  «  Infra,  p.  63. 

*  Richardson  v.  Boston,  148  Mass.  508 ;  Greene  et  al.  v.  Mamford 
et  al.,  4  R.  I.  313. 

*  Dorr  V.  Boston,  6  Gray,  131 ;  Anthony  v.  Caawell,  15  R.  L  159; 
Ames,  279,  n. 

*  Hunt  V.  Ferry,  165  Mass.  287. 


26  A  trustee's  handbook. 

is  over  assessed,  and  owing  to  his  neglect  tlie  over  assess- 
ment cannot  be  recovered,  lie  would  probablj-  not  be  able 
to  charge  the  over  assessment  to  the  trust. 

Personally  liable  as  Owner  of  Property.  —  A  trustee  is 
personally  liable  as  owner  of  property  in  actions  for  a  nui- 
sance, or  for  a  negligent  use  of  the  property  which  causes 
damage.^  As,  for  instance,  he  is  liable  to  a  person  injured 
by  snow  from  the  roof  of  a  building,  or  in  failing  to  keep 
the  sidewalk  in  repair,  or  causing  water  to  overflow ;  but 
if  the  liability  be  incurred  without  fault  of  the  trustee,  he 
may  charge  the  property,  as  where  a  person  was  injured 
by  a  falling  limb  from  a  tree,  although  the  trustee  had 
exercised  all  due  care  in  having  the  wood  cut ;  ^  but  if  the 
trustee  was  in  fault,*  he  will  have  no  right  to  indem- 
nit}',  and  if  the  damage  is  greater  than  the  value  of  the 
trust  propert}',  he  will  be  personally  liable,  irrespective  of 
his  right  to  indemnity  from  the  trust  property.*  The  ac- 
tion is  against  him  personal!}-,  and  it  is  immaterial  that  he 
is  described  in  the  writ  as  "  trustee."  ^ 

So,  too,  a  trustee  may  be  criminally  liable  for  a  nuisance 
on  the  trust  propert}',**  or  may  be  liable  to  indictment  under 
liquor  or  gambling  laws. 

The  Trustee's  Ownership  is  not  Beneficial.  —  Although 
the  trustee  is  the  absolute  owner  of  the  property,  he  can 
take  no  benefit  from  his  ownership,  and  he  may  not  deal 
with  the  estate  for  his  own  profit,  or  for  any  purpose  uncon- 
nected with  the  trust.''    All  the  benefits  belong  to  the  ben- 

1  Schwab  V.  Cleveland,  28  Hun,  458. 

2  Benett  v.  Wyndham,  4  DeG.,  F.  &  J.  259. 
8  Norling  v.  Allee,  13  N.  Y.  Supp.  791. 

*  Underhill,  426,  n. 

*  Shepard  v.  Creamer,  160  Mass,  496;  Baker  v.  Tibbetts,  162  Mass. 
468. 

6  People  V.  Townsend,  3  Hill,  479. 

7  Cal.  Civil  Code  (1885),  §  2229;  Comp.  Laws  Dak.  (1887),  §3922; 
Code  of  Ga.  (1895),  §  3183;  Rev.  Code  N.  Dak.  (1895),  §  4265. 


THE  INDIVrDTJAL  AS  TBUSTEE.  27 

eficiaries,  and  the  trustee  has  no  more  right  to  any  of  them 
than  he  has  to  the  property  of  a  stranger.  All  his  skill 
and  labor  must  be  directed  to  the  advancement  of  the 
interests  of  his  benficiaries.^  He  may  take  no  benefit 
directly  or  indirectly  from  the  estate  or  his  oflSce,  except 
the  regular  compensation  allowed  by  law,  and  if  he  take 
a  present  or  be  paid  a  bonus  or  commission  of  any  kind 
in  a  trust  transaction  by  a  stranger,  he  must  account  to 
the  trust  for  it.^  He  cannot  set  off  his  own  debts  in  equit}' 
against  one  who  sues  him  as  trustee.^ 

He  cannot  use  the  real  estate  or  chattels,  or  pledge  any 
of  the  property,  as  security  for  his  debts.  Nor  can  he  pur- 
chase them  directly  or  indirectly  at  public  or  private  sale,* 
except  b}'  arrangement  with  all  the  beneficiaries,  or  under 
leave  of  court,  ^  or  at  a  judicial  sale  which  he  does  not  con- 
trol in  an}'  manner.*  Nor  can  a  husband  or  wife  being 
trustee  sell  to  the  other,'  even  though  the  other  be  a  bene- 
ficiary. It  is  immaterial  that  the  price  paid  is  a  fair  one. 
The  transaction  is  a  breach  of  trust,  and  may  be  set  aside 
by  the  beneficiar}-,^  but  no  stranger  to  the  estate  can 
question  the  transaction.* 

If  however  the  property  be  honestly  sold  to  a  third  per- 
son, there  being  no  scheme  to  repurchase,  the  trustee  is 
not  disabled  from  buying  it  subsequently.^" 

He  cannot  speculate  with  the  trust  funds  under  the 

1  Arnold  v.  Brown,  24  Pick.  89,  96. 

«  Infra,  p.  28. 

»  Infra,  p.  42. 

*  Hoyt  V.  Latham,  143  U.  S.  553;  Morse  v.  Hill,  136  Mass.  60; 
Amer.  &  Eng.  Encyc.  Law,  vol.  27,  p.  197. 

6  Morse  v.  Hill,  136  Mass.  60,  67. 

«  Allen  V.  Gillette,  127  U.  S.  589. 

T  Davoue  v.  Fanning,  2  Johns.  Ch.  (N.  Y.)  252.  In  Lingke  v.  Wil- 
kinson,  57  N.  Y.  445,  it  was  held  that  a  trustee  might  sell  to  his  son, 
but  two  judges  dissented,  and  the  principle  is  very  doubtful. 

8  Denholm  v.  McKay,  148  Mass.  434 ;  Davoue  v.  Fanning,  2  Johns 
Ch.  (N.  Y.)  252 ;  Quirk  v.  Liebert,  12  App.  D.  C.  394.     Infra,  p.  142. 

"  Harrington  j;.  Brown,  5  Pick.  519. 

w  Creveling  v.  Fritts,  34  N.  J.  Eq.  134. 


28  A  trustee's  handbook. 

guise  of  a  loan  to  himself;^  if  he  does,  all  the  profit 
will  belong  to  the  trust,  and  if  the  profit  does  not  equal 
interest  he  must  pay  interest.'* 

He  cannot  borrow  the  trust  funds  on  any  security,  and 
he  should  not  lend  them  to  his  familj'  or  associates  on  any 
terms.' 

He  cannot  swell  his  personal  credit  by  keeping  a  large 
balance  of  the  trust  funds  at  his  bankers. 

He  cannot  come  in  competition  with  the  trust  estate, 
nor  make  a  profit  b}^  buying  up  claims  against  the  estate 
at  a  discount,  dii"ectly  or  indirectly.* 

By  statute  in  some  jurisdictions  he  cannot  enforce  a 
claim  against  the  estate  acquired,  nor  make  a  profit  out  of 
the  trust  estate  in  any  other  manner.^ 

Where  the  English  rule  prevails  which  refuses  compen- 
sation to  a  trustee,  he  should  not  employ  himself  or  his 
partner  to  render  expert  services  to  the  estate,  or  if  he 
does  he  may  receive  no  compensation  therefor.  But  in 
most  other  jurisdictions,  if  he  could  have  given  such  em- 
ployment legitimately  to  another,  he  may  render  it  himself 
and  receive  reasonable  compensation  for  his  services  ;  as, 
for  example,  where  he  acts  as  counsel,  broker  or  agent  to 
collect.^  But  the  law  is  not  uniform,  and  in  some  States 
he  cannot  take  any  compensation.'' 

In  practice  the  matter  is  a  delicate  one,  and  it  is  a  bet- 

1  Brown  v.  Rickets,  4  Johns.  Ch.  303 ;  Townend  v.  Townend,  1  Gi£E. 
201. 

2  Piety  V.  Stace,  4  Ves.  Jr.  620. 
8  Kyle  V.  Barnett,  17  Ala.  306. 

*  Slade  V.  Van  Vechten,  11  Paige,  21 ;  King  v.  Cushman.  41  111.31. 

6  Comp.  Laws  Dak.  (1887),  §  3945;  Rev.  Code  N.  Dak.  (1895), 
§  4288;  Civ.  Code  Cal.  (1885),  §  2263. 

*  Turn  bull  v.  Pomeroy,  140  Mass.  117,  118;  Lowrie's  Appeal,  1 
Grant,  373;  Perkins's  Appeal,  108  Pa.  St.  314.    Perry,  §  432,  contra. 

7  He  can  take  none  in  New  York,  Missouri,  or  South  Carolina. 
Collier  v.  Munn,  41  N.  Y.  143  ;  Gamble  v.  Gibson,  59  Mo.  585  ;  Mayer 
V.  Gallnchat,  6  Rich.  Eq.  1.  The  reason  assigned  in  some  of  the  cases, 
namely,  that  a  trustee  cannot  deal  with  himself,  is  manifestly  unsound, 
as  it  is  conceded  that  he  can  collect  other  expenses,  etc. 


THE  INDIVrDUAL  AS  TRUSTEE.  29 

ter  rule  to  avoid  the  difficulty  altogether  by  employing  a 
stranger ;  but  where  such  employ noent  is  allowed,  the  charge 
for  expert  services,  together  with  the  regular  commission, 
should  not  amount  to  more  than  reasonable  compensation 
for  all  the  services  rendered.^ 

He  must  pay  over  to  the  trust  estate  any  bonus  he  re- 
ceives in  the  performance  of  his  duties,  or  for  resigning 
the  trust, ^  but  he  need  not  account  for  the  profit  which  he 
receives  from  other  business  that  be  receives  owing  to  the 
fact  that  he  is  trustee.' 

May  have  Expenses  from  Trust  Fund.  —  On  the  other 
band,  the  trusteeship  should  not  be  a  burden,  and  the 
trustee  may  pay  from  the  estate  all  the  expenses  which  he 
incurs  as  owner,  such  as  taxes,  repairs,  and  insurance,  and 
he  ma}'  charge  the  estate  irrespective  of  the  provisions  of 
the  settlement  with  all  the  legitimate  expenses  of  man- 
agement,* as  traveUing  expenses,^  the  cost  of  justifiable 
litigation,  and  expense  of  consulting  counsel  when  there  is 
reasonable  cause,"  and  if  he  be  not  at  fault  judgments 
recovered  against  him  as  owner  of  the  propert}',^  or, 
where  the  employment  is  reasonable  and  usual,  the  ex- 
pense of  brokers  or  agents,  or  the  expense  of  looking  after 
the  beneficiar}',  as  for  instance  having  him  declared  in- 
sane and  placed  under  guardianship  ; '  and  in  some  States 
the  premium  paid  a  surety  company  on  his  official  bond 
may  be  charged  to  the  estate." 

1  Turnbnll  v.  Pomeroy,  140  Maes.  117,  118;  Lowrie's  Appeal,! 
Grant,  373;  Perkins's  Appeal,  108  Pa.  St.  314.  Perry,  §  432,  contra. 
Infra,  p.  32. 

3  Sngden  v.  Crossland,  3  Sim.  &  Giff.  192. 

»  Whitney  v.  Smith,  L.  R.  4  Ch.  App.  513. 

♦  Perrine  V.  Newell,  49  N.  J.  Eq.  58  ;  Perry,  §  910. 

»  Rev.  Stats.  Me.  (1883),  ch.  63,  §  32. 

«  Forward  v.  Forward,  6  Allen,  494,  497 ;  Teague  v,  Corbitt,  57 
Ala.  529 ;  Rev.  Stat.  Me.  (1883),  ch.  63,  §  32. 

T  Supra,  p.  26.  *  Jnfra,  p.  69. 

9  As  to  apportionment  of  charges  between  income  and  principal, 
see  infra,  pp.  104  et  seq. 


80  A  trustee's  handbook. 

Ordinarily,  the  expense  of  accounting,  not  including 
court  expenses,  and  clerk  hire  and  office  rent,  are  included 
in  the  ordinar}-  allowance  made  as  compensation,^  and  so 
are  not  charged  to  the  trust,  but  where  it  is  necessary  to 
keep  a  clerk  exclusively  for  a  particular  trust  it  would  be 
the  ground  for  an  extra  charge.^ 

He  has  a  lien  on  the  estate  for  his  expenses,  and  may 
reimburse  himself  out  of  income  or  hold  possession  of  the 
corpus  of  the  estate  until  he  is  paid,  (a)  but  not  if  he  has 
exceeded  his  powers,  has  been  guilty  of  a  breach  of  trust, 
or  is  in  default.^ 

Before  incurring  expense  he  may  require  security  if 
there  is  doubt  about  his  being  reimbursed,  and  he  has  a 
right  to  his  costs  prior  to  all  charges.* 

Compensation.  —  In  England  and  Delaware  ^  the  trus- 
tee cannot  charge  for  services ;  but  in  all  the  other 
States  he  is  entitled  to  reasonable  compensation.  The 
amount  of  the  compensation  is  fixed  by  statute  or  rule 
of  court,  and  is  usually  by  way  of  commission  on  the 
gross  income  collected,  and  ranges  from  five  to  ten  per 
cent.  The  court  usually  allows  the  highest  amount  paid 
agents,  factors,  and  the  like,  for  performing  similar  ser- 
vices.® The  trustee  may  agree  as  to  amount  of  commis- 
sion with  the  beneficiary,  if  the  beneficiary  is  competent 
to  act,  and  no  undue  advantage  is  taken ;  and  the  court 
should  take  the  agreement  into  consideration  in  fixing  the 
amount  of  compensation.''  Although  the  amount  to  be 
allowed  rests,  in  the  absence  of  statute,  in  the  sound  dis- 

1  Little  V.  Little,  161  Mass.  188. 

2  Meeker  v.  Crawford,  5  Redf.  (N.  Y.)  450, 
8  Perrine  v.  Newell,  49  N.  J.  Eq.  58. 

*  Woodard  j;.  Wright,  82  Cal.  202;  Bradbury  v.  Birchmore,  117 
Mass.  569;  Dodds  i-.  Tuke,  25  Ch.  Div.  617. 

6  State  V.  Piatt,  4  Earring.  154. 

*  Barren  v.  Joy,  16  Mass.  221. 

7  Bowker  v.  Pierce,  130  Mass.  262. 

(a)  Even  though  the  trust  itself  is  invalid.  Merry  v.  Pownall,  67 
L.  J.  Ch.  162 ;  (1898),  1  Ch.  306. 


THE  INDIVIDTJAIj  AS  TRUSTEE.  31 

cretion  of  the  court,  the  judgment  is  not  conclusive  on 
persons  not  properly  parties  to  the  case.^ 

In  man3'  cases  a  commission  on  income  will  not  amount 
to  reasonable  compensation,^  and  in  such  cases  an  extra 
charge  will  be  allowed  ;  *  and  in  cases  where  valuable  ser- 
vice has  been  rendered  to  the  principal  fund  over  and 
above  what  is  covered  b}-  the  ordinary  commission,  a 
charge  on  principal  will  be  allowed.*  The  ordinary  chan- 
ging of  investments  is  not  such  a  service,^  and  even  where 
it  is  a  case  of  extraordinary'  trouble  entitling  the  trustee 
to  an  extra  charge,  the  court  will  not  allow  compensation 
b}'  way  of  commission,  in  these  cases,  as  it  is  against  its 
policy  to  encourage  frequent  changes  and  excessive  expen- 
diture ; '  but  the  sale  and  conversion  of  real  estate,  or  the 
difficult  settlement  of  a  large  claim,  are  usually  considered 
extra  services.  The  court  disallowed  a  commission  of  five 
per  cent  for  warranting  a  title.''  In  some  jurisdictions  the 
trustee  will  be  allowed  compensation  for  professional  ser- 
vices, but  in  other  jurisdictions  he  will  not.^ 

A  cumulative  commission  is  never  allowed,  as  for  in- 
stance a  commission  in  two  capacities,  such  as  guardian 
and  trustee,  from  the  management  of  the  same  fund,®  un- 
less there  was  a  complete  separation  of  duties,^"  or  for  col- 
lecting and  disbursing  the  funds,  but  the  commissions, 
however  and  on  whatever  charged,  must  not  amount  in  all 

1  Infra,  p.  79 ;  Jenkins  v.  Whyte,  62  Md.  427. 

2  Dixon  V.  Homer,  2  Met.  420. 

«  TurnbuU  v.  Pomeroy,  140  Mass.  117. 

♦  Ellis  V.  Ellis,  12  Pick.  178 ;  Pitney  v.  Everson,  15  Stew.  (N.  J.) 
361,  367  ;  Biddle's  Appeal,  83  Pa.  St.  340. 

'  Jenkins  v.  Whyte,  62  Md.  427. 

'  Blake  y.  Pegram,  101  Mass.  .592;  May  v.  May,  109  Mass.  252, 

'  Urann  v.  Coates,  117  Mass.  41. 

'  Supra,  p.  28. 

9  Brightly'g  Pardon's  Dig.  Pa.  (1894),  p.  616,  §  239 ;  Meeker  v. 
Crawford,  5  Redf.  (N.  Y.)  452. 

'0  Johnson  v.  Lawrence,  95  N.  Y.  154 :  Blake  v.  Pegram,  101  Mass. 
592. 


32  A  TRUSTEE'S  HANDBOOK. 

to  more  than  reasonable  compensation  for  all  the  services.* 
The  commission  should  be  deducted  from  current  pay- 
ments, and  not  in  a  lump  on  the  termination  of  the  trust ;  ^ 
but  the  claim  for  a  commission  is  barred  by  limitation  from 
the  end,  not  the  beginning,  of  a  trust.' 

A  commission  of  one  to  two  and  one  half  per  cent  on 
the  personal  property  is  usually  allowed  on  the  turning 
over  or  distributing  the  trust  estate. ^  No  commission  is 
ordinarily  allowed  on  real  estate  which  vests  in  the  re- 
mainder-man by  the  force  of  the  original  instrument.^ 
When,  however,  a  large  amount  of  the  personal  has  been 
rightly  converted  into  real  estate  by  payment  for  improve- 
ments on  it,  a  commission  may  be  allowed  on  that  amount.^ 
No  commission  is  allowed  on  assuming  the  trust.^  If  the 
trustee  has  been  unfaithful  or  mismanaged  his  trust,  com- 
pensation may  be  withheld  ; '  or  allowed  only  to  the  extent 
that  the  estate  has  benefited  by  his  services.^  But  under  a 
statute  allowing  specified  commissions,  the  court  disclaimed 
power  to  withhold  a  commission  for  unfaithfulness." 

Where  the  matter  of  commission  is  regulated  by  statute, 
the  rate  prescribed  by  the  trust  instrument  will  govern,  as 
the  statutes,  expressly  in  many  cases,  and  impliedly  in 
almost  all,  provide  that  the  provisions  of  the  instrument 
shall  govern  ;  and  this,  although  no  exact  sum  is  specified. 
As,  for  instance,  if  the  instrument  provides  for  "  reason- 
able compensation,"  the  amount  will  not  be  confined  to 
the  statutory  rate.^^ 

1  Blake  v.  Pegram,  101  Mass.  592. 

2  Parker  v.  Ames,  121  Mass.  220;  Spencer  t*.  Spencer,  38  App.  Div. 
(N.  Y.)  40.3.  *  Reese  v.  Meetze,  51  So.  Car.  333. 

*  More  V.  Calkins,  95  Cal.  435,  441 ;  Ga.  Code  (1895),  §  2552,  and 
§§  3484-3489  ;  Crocker's  Notes  on  Pub.  Stat.  Mass.  384 ;  Gen.  Stat. 
N.  J.  (1895),  p.  2385,  §  125 ;  Manual  of  Wills,  Tucker,  pp.  120,  121  ; 
Biddle's  Appeal,  83  Pa.  St.  340;  Smith  v.  Lansing,  53  N.  Y.  S.  633; 
In  re  Gill,  47  N.  Y.  S.  706. 

6  Roosevelt  v.  Van  Allen,  31  App.  Div.  (N.  Y.)  1. 

«  Spencer  v.  Spencer,  38  App.  Div.  (N.  Y.)  403. 

'  Dixon  V.  Homer,  2  Met.  420.       ^  Brooks  v.  Jackson,  125  Mass.  307. 

•  Jennison  v.  Hapgood,  10  Pick.  77.     lo  In  re  Fitzgerald,  57  Wis.  508. 
"  E.  g.  Compiled  Laws  Dak.  (1887),  §  3950,  and  Statutes  passim; 

Parker  v.  Ames,  121  Mass.  220 


THE  INDrVTDUAL  AS  TKUSTEE.  33 

The  rule  in  each  jurisdiction,  so  far  as  it  is  determined 
by  a  reported  decision  or  statute,  is  given  below.  Where 
no  authority  exists,  in  the  absence  of  actual  knowledge  of 
a  definite  practice  recognized  and  followed  in  the  lower 
courts,  it  is  usually  safe  to  follow  the  rules  laid  down  for 
executors  and  administrators,  mutatis  mutandis.^ 

Alabama.  —  Reasonable  compensation  ;  GriflSn  v.  Prin- 
gle,  56  Ala.  486 ;  5  per  cent  allowed  in  Pinckard's  Dis- 
tributees V.  Pinckard's  Adm'r,  24  Ala.  250. 

Arizona.  — No  authority  ;  as  to  executors  and  adminis- 
trators. Revised  Statutes  (1887),  §  1212. 

Arkansas.  —  Rate  provided  in  settlement,  and  enough 
to  make  reasonable  compensation ;  Briscoe  v.  State,  23 
Ark.  592 ;  as  to  executoi's  and  administrators,  Digest  of 
Statutes  (1894),  §  134. 

California.  —  See  Civil  Code  (1886),  §§  2273,  2274,  and 
Civil  Code  of  Procedure,  §  1618.  On  the  amount  of  estate 
accounted  for,  7  per  cent  up  to  $1,000 ;  5  per  cent  from 
$1,000  to  $10,000  ;  4  per  cent,  $10,000  to  $20,000;  3  per 
cent,  $20,000  to  $50,000  ;  2  per  cent,  $50,000  to  $100,000. 
All  over  $100,000,  1  per  cent,  and  such  further  allowance 
for  extra  services  as  court  may  allow,  not  exceeding  one 
half  amount  allowed  by  statute. 

Trustee  under  a  will,  see  Supplement  Civil  Code  (1889), 
p.  437,  §  1700,  such  compensation  as  court  deems  reason- 
able.    And  may  establish  a  yearlj'  allowance. 

Colorado.  —  No  authority.  As  to  executors,  Annotated 
Statutes  (1891),  §  4805. 

Connecticut.  —  Reasonable  compensation.  Clark  v. 
Piatt,  30  Conn.  282  ;  Babcock  v.  Hubbard,  56  Conn.  284. 

Dakota.  — Compiled  Laws  (1887),  §§  3949,  3950,  6888  ; 
5  per  cent  on  collections  up  to  $1,000  ;  4  per  cent  between 
SI  ,000  and  $5,000,  and  2^  per  cent  above  $5,000.  Judge 
of  Probate  may  make  allowance  for  extraordinary  services. 

1  A  bell  V.  Brady,  28  Atl.  Rep.  817;  for  other  aathorities  on  the 
subject  in  general,  see  Perry,  §  918,  n. 

3 


34  A  trustee's   HAIJDBOOK. 

Delaware.  —  Reasonable  compensation  in  discretion  of 
court.     Laws  of  Delaware  (1893),  p.  712. 

Florida.  —  Reasonable  compensation.  Muscogee  Co.  v. 
Hyer,  18  Fla.  698. 

Georgia.  —  Code  (1895),  §  3168.  Same  commissions  as 
guardian ;  §  3484,  2  J  per  cent  on  both  income  and  pa.y- 
raents  ;  §  3487,  10  per  cent  on  proceeds  of  land  worked ; 
§  3489,  extra  in  discretion  of  court;  §  2552,  on  paying 
over,  the  same  as  administrator. 

Idaho. — No  authority.  Executors  and  Administi'ators, 
Statutes  (1887),  §  5586. 

Illinois. — Reasonable  compensation.  Stats.  1891,  p. 
216.  And  this  applies  to  trusts  established  before  the  act. 
Arnold  v.  Alden,  173  111.  229. 

Indiana.  —  Reasonable  compensation.  Premier  Steel 
€o.  V.  Yandes,  139  Ind.  307. 

Iowa.  — Reasonable  Commissions.  In  re  Gloyd's  Est., 
61  N.  W.  Rep.  975. 

Kansas.  —  No  authorit)'. 

Kentucky.  —  Statutes  (1894),  §  3883,  not  to  exceed  5 
per  cent  on  amounts  received  and  distributed,  and  extra 
in  discretion  of  court.  Fleming  v.  Wilson,  6  Bush,  610, 
allowed  1^  per  cent  yearly  on  amount  of  principal ;  Ten 
Broeck  v.  Fidelity  Co.,  10  S.  W.  Rep.  798,  allowed  5  per 
cent  on  income,  and  1^  per  cent  on  investments. 

Maine.  —  Revised  Statutes  (1883),  ch.  63,  §  32 ;  5  per 
cent  and  expenses. 

Maryland.  —  5  per  cent  on  income.  Abell  v.  Brady,  28 
Atl.  Rep.  817. 

Massachusetts. —Public  Statutes  (1882),  ch.  144,  §  7. 
Discretion  of  court ;  general  rule,  5  per  cent  on  income. 
Barren  v.  Joy,  16  Mass.  221 ;  May  v.  Ma}^  109  Mass.  252  ; 
and  extras  earned. 

Michigan.— Annotated  Statutes  (1882),  §  6805.  Trus- 
tees appointed  by  Probate  Court,  same  compensation  as 
administrators,  §  5959.  Administrator  on  all  personal 
estate  and  proceeds  of  real  estate  sold.    First  $1,000, 


THE  INDIVIDUAL  AS   TRUSTEE.  35 

5  per  cent;   $1,000  to  $5,000,  2^  per  cent;   all  above, 
1  per  cent 

Minnesota.  —  No  authoritj- ;  but  executors,  administra- 
tors, and  guardians  are  allowed,  and  presumabl}'  trustees, 
such  reasonable  compensation  as  court  decrees  just. 
Statutes  Minn.  (1894),  §  4724, 

Mississippi.  —  Reasonable  Compensation.  Shirley  v. 
Shattuck,  28  Miss.  13. 

Missouri. — Reasonable  compensation.  Kemp  v.  Foster, 
22  Mo.  App.  643. 

Montana.  —  Civil  Code  (1895),  §  3031,  reasonable  com- 
pensation. Code  Civil  Procedure,  §  2776.  For  first  $1,000, 
7  per  cent;  all  between  $1,000  and  $10,000,  5  per  cent; 
between  $10,000  and  $20,000,  4  per  cent;  all  above 
$20,000,  2  per  cent ;  extra  not  to  exceed  amount  allowed 
by  statute. 

Nebraska.  —  No  authority.  For  executors,  see  Com- 
piled Statutes  Neb.  (1895),  §  2798. 

Nevada.  —  No  authority.  For  executors,  see  General 
Statutes  (1885),  §  2890. 

New  Hampshire.  —  Gordon  v.  "West,  8  N.  H.  444,  trus- 
tee allowed  1  per  cent  on  principal,  rate  of  income  being 

6  per  cent.     Practice  is  5  per  cent  on  income ;  Tuttle  v. 
Robinson,  33  N.  H.  104,  118. 

New  Jerse.y.  —  General  Statutes  (1895),  p.  ^380,  §§  109, 
110.  Actual  value,  p.  2402,  §  204.  Reasonable  compen- 
sation not  exceeding  5  per  cent  on  income. 

New  Mexico.  —  No  authority.  For  executors,  see 
Compiled  Laws  (1884),  §§  1404,   1445. 

New  York.  —  Code  of  Procedure  (1895),  §§  2730,  2802. 
Allowed  5  per  cent  up  to  $1.000 ;  $1,000  to  $10,000,  2^ 
percent,  for  all  above  $11,000,  1  per  cent. 

North  Carolina.  —  Reasonable  commission  not  exceed- 
ing 5  per  cent;  Sherrill  v.  Shuford,  6  Ired.  ¥jC\.  228. 

North  Dakota.  —Revised  Code  (1895),  §  4293,  same  as 
executors.  §  6492  for  first  $1,000,  5  per  cent;  $1,000  to 
$5,000,  4  per  cent.    All  above,  2^  per  cent. 


86  A  trustee's  handbook. 

Ohio.  —  Revised  Statutes  (1890),  §  6333;  reasonable 
compensation. 

Oklahoma.  —  No  authority.  Statutes  (1893),  §  1410,  as 
to  executors. 

Oregon.  —  No  authorit}'.  Executors,  Annotated  Laws 
(1892),  §  1180. 

Pennsylvania.  —  Brightly's  Purdon's  Digest  (1894),  p. 
2031,  §  29  ;  reasonable  compensation  ;  5  per  cent  reason- 
able, Pusey  V.  Clemson,  9  Serg.  &  R.  204  ;  Davis's  Appeal, 
100  Pa.  St.  201. 

Rhode  Island.  —  No  authority.  Executors,  General 
Laws  (1896),  ch.  219,  §  8. 

South  Carolina. — Revised  Statutes  (1893),  vol.  1, 
§  2099,  same  as  executors ;  §  2069,  executors  allowed  not 
exceeding  10  per  cent.  Court  has  no  discretion.  Cobb 
V.  Fant,  36  S.  C.  1. 

Tennessee. — Code  (1896),  §  3525.  Same  as  clerks 
and  masters,  not  exceeding  5  per  cent,  §  6388.  Clerks 
and  masters*  fees  defined. 

Texas.  —  No  authority.  Executors  entitled  to  5  per 
cent.     Sayles,  Revised  Statutes  (1895),  §  2245. 

Utah.  —  No  authority.  Executors,  Compiled  Laws 
(1888),  §§  4223-4225. 

Vermont.  —  Reasonable  compensation  ;  Hubbard  v. 
Fisher,  25  Vt.  539. 

Virginia.  —Code  (1887),  §  2695.  Reasonable  commis- 
sion on  receipts  or  otherwise.  Usually  5  per  cent,  Boyd 
V.  Oglesby,  23  Gratt.  674,  688. 

Washington.  — No  authorit3\  Executors,  Code  (1897), 
§  6314. 

West  Virginia.  —  Code  (1891),  ch.  87,  §  17.  Reason- 
able compensation.  Usual  5  per  cent.  Hoke  v.  Hoke,  12 
W.  Va.  427.  10  per  cent  allowed  for  extraordinary  ser- 
vices.    Shepherd  v.  Hammond,  3  W.  Va.  484. 

Wisconsin.  —  No  authorit}-.  Executors,  Annotated 
Statutes  (1889),  §§  3929,  3993. 

Wyoming.  —  On  personal    estate  distributed    or  real 


THE  DiTDlVrDirAL  AS  TRUSTEE.  37 

estate  sold  for  debts,  up  to  $1,000,  5  per  cent;  81,000 
to  $5,000,  2^  per  cent ;  for  all  over  $5,000,  1  per  cent. 

The  Trustee's  Estate.  ■^-  The  trustee  takes  an  absolute 
estate  in  personal  property ;  ^  but  in  real  estate  he  will 
take  a  large  enough  estate  to  administer  the  trusts  and 
no  larger,  entirely  irrespective  of  the  use  or  absence  of 
words  of  limitation,  or  the  technical  phraseology  of  the 
trust  instrument. '^ 

Thus  where  the  estate  is  granted  without  words  of  limi- 
tation, but  a  power  of  sale  is  given  to  the  trustee,  he  will 
take  an  estate  in  fee  instead  of  a  mere  life  estate,'  since 
without  a  fee  he  could  not  exercise  his  power;  but  no 
larger  estate  is  given  than  is  absolutely  necessar3-,  as, 
for  instance,  a  life  estate  being  sufficient  to  support  an 
annuity,  no  larger  estate  will  be  implied.* 

Although  a  fee  be  given  to  the  trustee  to  support  a  less 
estate,  as  e.  g.  for  the  benefit  of  A  until  B  comes  of  age, 
the  estate  will  vest  in  B  when  he  comes  of  age  irrespect- 
ive of  the  trustee's  fee  ;  *  and  there  is  often  statutory  pro- 
vision that  the  estate  of  the  trustee  shall  terminate  on  the 
completion  of  the  purposes  of  the  trust.' 

In  some  Code  States,  viz.  New  York,  Michigan,  Wiscon- 
sin, Minnesota,  and  Dakota,^  the  trusts  not  expressly  es- 
tablished by  statute  are  cut  down  to  a  mere  power  and  no 
title  vests  in  the  trustee. 

*  Pace  V.  Pierce,  49  Mo.  393.     See  infra,  p.  86. 

2  Cleveland  v.  Hallett,  6  Cash.  403 ;  Greenwood  v.  Coleman,  34 
Ala.  150;  King  v.  Parker,  9  Cash.  71. 

'  Bagshaw  v.  Spencer,  1  Ves.  Sen.  142;  Welch  v.  Allen,  21  "Wend. 
147. 

*  Norton  n.  Norton,  2  Sand.  296;  Code  Ga.  (1895),  §  3191 ;  Green- 
wood V.  Coleman,  34  Ala.  150. 

*  Slevin  V.  Brown,  32  Mo.  176  ;  Nash  v.  Coates,  3  B.  &  Adol.  839  ; 
Ga.  Code  (1895),  §3191. 

*  N.  Y.  Rev.  Stat.  (1896),  p.  1801,  §  67;  Mich.,  Wise.,  Minn.,  CaL, 
Dak.  Civ.  C. 

'  Rev.  Stat.  N.  T.  (1896),  p.  1797,  §§  56,  57  ;  Annot.  Stat.  Mich. 
(1882),  §  5577  ;  Stat.  Minn.  (1894),  §  4285 ;  Annot.  Stat.  Wise.  (1889), 
S  2084;  Comp.  Jj&vth  Dak.  (1887),  §  2803;  Seidelbach  v.  Knaggs,  44 
App.  Div.  (N.  Y.)  169. 


88  A  teustee's  handbook. 

A  passive  trustee  (that  is,  a  trustee  who  merely  holds  a 
naked  title  to  permit  another  to  do  something,  as  e.  g. 
collect  the  rents)  takes  a  modified  title,  about  which  we 
need  not  concern  ourselves,  as  such  trusts  ai'e  not  within 
the  scope  of  this  treatise. 

Possessiou.  —  At  law  the  trustee  is  entitled  to  the  pos- 
session of  the  real  estate,^  and  may  eject  the  beneficiar}',^ 
nor  can  the  beneficiary  deny  the  tiustee's  title  if  he  is  his 
landlord.^  He  is  equally  entitled  to  the  possession  of  the 
personal  propert}',*  but  the  beneficiary  may  have  an  equi- 
table right  to  possession  and  will  receive  it  under  those 
circumstances,^  though  even  then  at  law  his  possession 
will  technically  be  the  possession  of  the  trustee.  If  he 
buys  in  a  tax  title,  he  cannot  hold  it  against  the  trustee." 

Trustee's  Estate  is  Joint.  —  Trustees,  where  there  are 
more  than  one,  take  a  joint  estate  which  is  not  subject  to 
partition.^  If  one  trustee  conveys  his  part  without  joining 
the  others  the  convej'ance  is  void,  and  the  grantee  does 
not  take  an  undivided  estate  in  the  premises ;  no  title 
passes.^ 

All  the  trustees  are  equall}'  seised,  and  on  the  death  of 
one  the  whole  estate  vests  in  the  survivors.®  A  provision 
in  the  trust  instrument  for  keeping  up  the  number  of  the 

i  Clark  V.  Clark,  8  Paige,  153  ;  Beach  v.  Beach,  14  Vt.  28. 
2  Presley  v.  Stribling,  24  Miss.  527. 

8  White  V.  Albertsou,  3  Dev.  241. 

*  Pace  V.  Pierce,  49  Mo.  393 ;  Western  Rd.  Co.  v.  Kolan,  48  N.  Y. 
513. 

6  Infra,  p.  86. 

*  Frierson  v.  Branch,  30  Ark.  453. 

T  Atty.  Gen.  v.  Gleg,  1  Atk.  356;  Rev.  Stat.  Ind.  (1894;,  §3342; 
Rev.  Stat.  N.  J.  (1895),  p.  3685,  §  7. 

*  Chapin  v.  First  Univ.  Soc,  8  Gray,  580 ;  Learned  v.  Welton,  40 
Cal.  349;  Sinclair  v.  Jackson,  8  Cow.  543;  Morville  i;.  Fowle,  144 
Mass.  109;  but  see  contra,  Perry,  §  334,  and  Boursot  v.  Savage,  L.  R. 
2  Eq.  134. 

9  Co.  Lit.  113;  Ames,  346,  n. 


THE  INDrVTDUAL  AS   TRUSTEE.  39 

trustees  will  not  prevent  survivorship ;  ^  and  the  statutes 
common  in  States  providing  that  joint  tenancies  shall  be 
construed  as  tenancies  in  common  do  not  apply  to  trus- 
tees' estates.'* 

Transmission  of  the  Trustee's  Estate.  —  The  trustee, 
being  the  legal  owner,  may  make  conveyance,  and  his 
transferee  will  stand  at  law  entitled  in  his  place.*  But  if 
the  trustee  had  no  power  given  him  to  conve}-,  his  trans- 
feree would  take  no  larger  title  than  the  trustee  con- 
veyed, and  would  be  bound  by  the  trusts  his  grantor  was 
bound  b}'. 

In  the  Code  States  the  trustee  having  no  estate,  but  a 
power  merely*,  the  conveyance  would  be  simply  void,  and 
no  estate  would  pass ;  and  there  is  a  similar  statutory  pro- 
vision in  Indiana.* 

Alienation.  —  If  the  trustee  transfers  his  estate  to  a 
purchaser  for  value  without  notice  of  the  trust,  the  pur- 
chaser will  acquire  the  title  discharged  of  the  trust.^  This 
is  universal  law,  but  is  often  enacted  by  statute.* 

In  some  jurisdictions  an  attaching  creditor  is  on  the 
same  footing  as  a  purchaser  for  value ; '  but  if  the  property 

1  Shook  V.  Shook,  19  Barb.  653  ;  Dixon  v.  Homer,  12  Cush.  41. 

2  Underhill,  382,  n. 

'  Canoy  v.  Troutman,  7  Ired.  155. 

*  Rev.  Stat.  N.  Y.  (1896),  p.  1799,  §  65;  Rev.  Stat.  Ind.  (1894), 
§  3395;  Annot.  Stat.  Mich.  (1882),  §  5583  ;  Annot.  Stat.  Wise.  (1889), 
§  2091  ;  Gen.  Stat.  Kan.  (1889),  §  7163  ;  N.  Dak.  Civ.  Co.  (1895),  §  3400; 
Comp.  Laws  Dak.  (1887),  §  2810;  Stat.  Okla.  (1893),  §  3773;  Stat. 
Minn.  (1894),  §  4294. 

'  Perry,  §§  217  et  seq.;  Ames,  286,  n.,  has  a  full  discussion  of  au- 
thorities.    See  also  infra,  p.  150. 

«  Rev.  Stat.  N.  Y.  (1896),  p.  1799,  §§  64,  65  ;  Annot.  Stat.  Mich. 
(1882),  §  5572;  Annot.  Stat.  Wi»c.  (1889),  §  2080;  Civil  Code  Calif. 
(1885),  §  856  ;  N.  Dak.  Code  (1895),  §  3387  ;  Stat.  Okla.  (1893),  §  3761 ; 
Rev.  Stat.  Ind.  (1894),  §  3392  ;  Gen.  Stat.  Kan.  (1889),  §  7160;  Rev. 
Stat.  Me.  (1883),  ch.  73,  §  12;  Ala.  Code  (1896),  §  1042;  Stat.  Minn. 
(1894),  §428.3. 

7  Mass.  Pub.  Stat.  (1882),  ch.  141,  §  3. 


40  A  trustee's  handbook. 

were  transferred  to  secure  a  pre-existing  debt,  the  trans- 
feree  is  not  a  purchaser  for  value. 

If  the  purchaser  has  reason  to  believe  that  the  property 
is  held  in  trust,  and  fails  to  make  proper  inquiries,  he  is 
not  a  purchaser  without  notice  ;  and  the  word  "  trustee" 
occurring  on  the  face  of  the  deed  or  certificate  is  sufficient 
to  put  him  to  his  inquiry  as  to  the  trustee's  power  to  trans- 
fer the  property.' 

If  a  purchaser  has  once  acquired  a  good  title,  he  may 
transfer  a  good  title  to  any  one  but  the  person  who  de- 
frauded the  trust  in  the  first  place ;  and  even  he  may 
hold  title  if  he  takes  it  as  trustee  in  another  trust,  (a) 

If  the  trustee  have  the  power  to  transfer,  his  transferee 
will  take  a  good  title  unless  he  knows  that  the  transfer  is 
a  breach  of  trust ;  and  the  fact  that  the  consideration  is 
inadequate,  or  that  it  goes  elsewhere  than  to  the  trust 
estate,  will  be  sufficient  notice  of  fraud  to  invalidate  the 
title.2 

No  title  to  trust  property  will  pass  b}-  a  general  assign- 
ment, as  the  trustee  will  not  be  supposed  to  intend  to 
commit  a  breach  of  trust,  and  the  deed  will  not  be  so  con- 
strued as  to  make  him  do  so.* 

Where  the  trustee  was  one  of  the  beneficiaries  as  well 
as  trustee,  it  was  said  that  the  legal  title  would  pass  sub- 
ject to  the  execution  of  the  trusts,  but  the  better  opinion 
seems  to  be  that  it  will  not.* 

No  title  will  pass  to  the  trustee's  assignee  in  bankruptcy 
or  insolvency' ;  ^  nor  can  the  trust  property  be  taken  for  the 
trustee's  private  debt.^ 

If  the  creditor  levies  with  notice  of  the  trust,  he  will 

1  Smith  V.  Burgess,  133  Mass.  511  ;  Shaw  v.  Spencer,  100  Mass.  382  ; 
Third  Nat.  Bk.  v.  Lange,  .51  Md.  138.     Infra,  p.  150. 

2  Wormeley  i-.  Wormeley,  1  Brock  U.  S.  Cir.  Ct.  330. 

»  Thomson  v.  Peake,  17  S.  E.  45 ;  Rogers  v.  Chase,  56  N.  W.  537  ; 
Abbott,  Adm'r,  Pet'r,  55  Me.  580. 

*  Doe  d.  Raikes  v.  Anderson,  I  Starkie,  155 ;  Fausset  v.  Carpenter, 
2  Dow  &  Clark,  232. 

6  Ames,  393,  n.  *>  Supra,  p.  14. 

(a)  Meldon  v.  Devlin,  31  App.  Div.  (N,  Y.)  146, 


THE  INDIVIDirAIi  AS  TRUSTEE.  41 

take  title  subject  to  the  trust ;  ^  but  if  he  attaches  in  some 
States  without  any  notice,  he  will  stand  in  the  position  of 
a  bona  fide  purchaser." 

The  trust  property  may  be  taken  on  execution  for  debts 
incurred  by  the  trustee  in  the  execution  of  his  trusts, 
in  all  jurisdictions  to  the  extent  to  which  the  trustee  is 
entitled  to  reimbursement,  and  in  some  without  regard  to 
his  claim.'  That  is  to  say,  in  most  jurisdictions  the  credi- 
tor takes  onl}'  by  subrogation  through  the  trustee,  and  so 
is  liable  to  all  the  set-oflfs  which  the  trustee  would  be  ;  as, 
for  instance,  if  the  trustee  were  in  default,  the  ci'editor 
would  only  take  the  amount  due,  less  the  default.* 

If,  however,  the  trustee  were  given  the  powers  of  a  gen- 
eral agent  by  statute  or  by  the  trust  instrument,  —  as,  for 
instance,  where  he  is  authorized  to  carry  on  the  testator's 
business,  —  the  liabilit}'^  would  bind  the  trust  estate  to  the 
extent  of  his  authority ;  but  even  then  it  is  held  that  the 
creditor  must  come  against  the  trustee  first.* 

The  court  has  held  in  Mississippi,^  and  it  is  provided  by 
statute  in  Alabama,'  that  where  the  trustee  is  dead,  insol- 
vent, or  out  of  the  court's  jurisdiction,  the  creditor  may 
proceed  against  the  trust  property'  direct. 

A  mechanic's  lien  will  attach  to  a  trust  estate  only  where 
the  trustee  has  the  power  to  contract  for  the  labor  for 
which  recovery  is  sought,*  and  is  not  forbidden  to  encum- 
ber the  estate  hy  the  trust  instrument." 

1  Warren  v.  Ireland,  29  Me.  62 ;  Houghton  v.  Davenport,  74  Me. 
590. 

»  Supra,  p.  39. 

»  15  Amer.  Law  Rev.  449;  Wylly  v.  Collins,  9  Ga.  223;  Mander- 
son's  Appeal,  113  Pa.  631 ;  Sanders  v.  Houston  Guano  &  Warehouse 
Co.,  107  Ga.  49. 

♦  Strickland  v.  Symona,  26  Ch.  Div.  245  ;  Ames,  423,  n. ;  Mason  ». 
Pomeroy,  1.51  Mass.  164;  Norton  v.  Phelps,  54  Miss.  467;  Ga.  Code 
(1895),  §3185. 

»  Fairland  o.  Percy,  L.  R.  8  Prob.  &  Div.  217. 
'  Norton  v.  Phelps,  54  Miss.  467. 
'  Stat.  Ala.  (1896),  §  4183. 

*  Meyers  v.  Bennett.  7  Daly  (N.  Y.),  471. 

•  Franklin  Savings.  Bank  v.  Taylor,  131  111.  376. 


42  A  trustee's  handbook. 

Set-off.  — The  trustee's  private  creditor  might  set  off 
his  debt  in  a  suit  at  law,  unless  he  knew  at  the  time  of  its 
creation  that  the  claim  was  a  trust  claim,  in  which  case  he 
will  be  enjoined  from  doing  so  in  equit}' ;  ^  but  if  he  were 
ignorant  of  the  trust  relationship,  he  ma}-  keep  his  set-off.* 

The  trustee's  private  creditor  has  no  set-off  in  equity, 
bankruptcy,  or  insolvency. 

A  creditor  of  the  beneficiary  may  set  off  his  debt  in 
equity  or  in  an  action  at  law  by  the  trustee  as  an  equitable 
bar  in  most  jurisdictions.^ 

The  trustee  can  onlj-  set  off  such  debts  as  his  beneficiary 
could  set  off,  and  in  equit}*  can  set  off  the  debts  of  the 
beneficiar}.* 

In  equity  the  defendant  may  set  off  a  debt  due  a  third 
person  as  trustee  for  the  defendant,  and  is  generally  enti- 
tled to  such  set-off  as  an  equitable  plea.® 

Title  passes  to  Remainderman  though  his  Estate  be 
only  Equitable.  —  Where  the  trustee's  estate  is  reduced 
to  a  mere  power  by  statute,®  or  where  a  life  estate  only 
was  necessary  to  execute  the  trusts,  the  trust  estate  will 
pass  out  of  the  trustee's  hands,  and  vest  in  the  remainder- 
man, even  though  he  have  an  equitable  estate  only,  when 
the  purposes  of  the  trust  are  accomplished,  and  the  inter- 
vention of  the  trustee  will  not  be  necessary  to  perfect  the 
title.''  But  in  the  absence  of  statute,  where  the  trustee 
took  a  fee,  a  convej'ance  by  the  trustee  under  such  cir- 
cumstances is  necessar}'.' 

1  Nat.  Bk.  V.  Ins.  Co.,  104  U.  S.  54. 

'^  School  Dist.  V.  First  Bank,  102  Mass.  174. 

'  Ames,  270,  n. ;  but  see  Walker  v.  Brooks,  12.5  Mass.  241. 

*  Walker  v.  Brooks,  125  Mass.  241  ;  Rev.  Stat.  Me.  (1883),  ch.  82, 
§  63;  Pub.  Stat.  Mass.  (1882),  ch.  168,  §§  11,  14;  Comp.  Laws  N.  M. 
(1884),  §  2343  ;  Annot.  Stat.  Wise.  (1889),  §  4260. 

*  Ames,  270,  n. 

8  Stats,  in  N.  Y.,  Mich.,  Wise,  &c.     Supra,  p.  59. 
'  Morgan  v.  Moore,  3  Gray,  319;  Cherry  v.  Richardson,  24  S.  Rep. 
570  (Ala.  1898). 

8  Packard  v.  Marshall,  138  Mass.  301.     In/ra,  p.  119. 


THE  INDIVIDUAL  AS  TRUSTEE.  43 

On  the  resignation  or  disabilit}-  of  a  trustee  the  title  to 
the  property  may  vest  in  the  successor  by  conveyance  of 
the  outgoing  trustee,  or  where  there  is  a  statute  authoriz- 
ing it  the  court  may  appoint  a  person  to  convc}-  the  estates, 
if  he  be  beyond  the  jurisdiction.  In  the  absence  of  such 
statute  there  is  no  way  of  divesting  the  outgoing  trustee's 
title  save  b}'  act  of  the  legislature.  Such  acts  are  not 
unconstitutional,  as  the  estate  taken  is  not  beneficial  to 
the  trustee.^ 

Transmission.  Forfeitxure.  —  Forfeiture  of  the  trustee's 
property  formerly  carried  with  it  a  forfeiture  of  the  trust 
propert}',  although  the  Crown  took  subject  to  the  trust ;  * 
but  now  there  is  no  forfeiture  in  equity,  and  it  is  generally 
provided  by  statute  that  there  shall  be  neither  forfeiture 
nor  escheat. 

Transmission  on  Death  of  Trustee.  —  When  one  of  sev- 
eral trustees  dies,  both  the  office  and  the  title  to  the  estate 
vest  in  his  co-trustees  by  survivorship;'  and  when  a  sole 
trustee  dies,  it  is  generally  provided  by  statute  that  the 
property  and  office  shall  vest  in  his  successor  in  the  trust, 
the  title  in  the  meanwhile  remaining  in  the  court  or  his 
heirs  and  personal  representatives.* 

Aside  from  statute,  on  the  death  of  a  sole  trustee  testate 
the  property'  will  pass  to  his  general  devisee  in  the  absence 
of  intent  to  confine  the  disposition  of  property  to  that  in 
which  he  had  a  beneficial  interest ;  but  it  will  not  pass  to 
a  general  devisee  where  such  an  intention  would  be  neg- 
atived by  the  circumstances ;  as,  for  instance,  where  the 
general  devisee  is  a  class  of  persons,  or  where  the  general 
devisee  is  a  minor,  or  otherwise  incapable  or  unfit.  In 
such  case  the  property  will  descend  to  the  heir  as  unde- 
vised estate. 

1  Supra,  p.  10. 

2  King  r.  Mildmay,  5  Barn.  &  Ad.  254. 

«  Supra,  p.  38:  Shook  v.  Shook,  19  Barb.  653. 

*  As  to  survival  of  office,  see  survival  of  powers,  infra,  p.  46. 


44  A  teustee's  handbook. 

If  the  sole  trustee  dies  intestate,  the  property-  will  de- 
scend to  his  representative  ;  ^  but  a  widow  has  no  dower,' 
and  a  husband  no  curtes}'  in  a  trust  estate.'  Or  in  some 
jurisdictions  the  title  to  real  estate  vests  in  the  court*  or 
eldest  son  by  statute.*  In  some  jurisdictions  they  may 
disclaim.* 

When  the  title  to  an  estate  vests  in  the  devisee,  heir,  or 
personal  representative  of  a  trustee,  the  devisee  or  per- 
sonal representative  only  holds  the  title  until  such  time  as 
a  successor  may  be  appointed ;  ^  he  does  not  succeed  to 
the  office,  but  to  the  title  only,'  and  he  has  power  to  exe- 
cute the  trust  only  so  far  as  is  necessary  to  preserve  it,' 
and  to  make  it  over  to  the  new  trustee,  and  make  up  an 
account.  It  is  entirely  inappropriate  for  him  to  attempt 
to  carr}'  on  the  trust,  and  in  many  jurisdictions  it  is  ex- 
pressly provided  that  he  takes  no  estate.^*^ 


n.    POWERS. 

Of  Powers  in  General.  —  It  does  not  come  within  the 
scope  of  this  treatise  to  consider  the  powers  which  a  trus- 
tee may  have  collateral  to  the  trust  estate,  whether  the}'  are 
to  be  exercised  over  the  trust  property  or  elsewhere.  As, 
for  instance,  a  power  to  distribute  the  trust  property  among 

1  Schenck  v.  Schenck,  16  N.  J.  Eq.  174. 

2  Gen.  Stat.  N.  J.  (1895),  p.  1280,  §  25. 
8  Flint,  §  125;  Perry,  §§  321,  322. 

*  New  York,  Michigan,  Wisconsin,  Alabama,  and  Missouri ;  Perry, 
§341. 

6  Pab.  Gen.  Laws  Md.  (1888),  Art.  46,  §  24. 

«  Perry,  §  344;  Mass.  Pub.  Stat.  (1882),  ch..l41,  §  11. 

7  Stevens  v.  Austen,  7  Jur.  N.  S.  873 ;  Harlow  v.  Cowdrey,  109 
Mass.  183. 

8  Mortimer  r.  Ireland,  11  Jurist,  721.  Infra,  p.  46.  But  otherwise 
in  some  States,  where  personal  representatives  succeed  to  trust.  West 
Va.  Code  (1891 ),  ch.  132,  §  6. 

•  De  Peyster  v.  Ferrers,  11  Paige,  13. 

W  Perry,  §344;  Code  Ala.  (1896),  §  1044. 


THE  INDIVrDITAL  AS  TRUSTEE.  45 

a  certain  class  of  persons,  and  apportion  the  shares  amono' 
beneficiaries,  such  as  children  or  charities. 

We  need  onlj'  concern  ourselves  with  those  powers  which 
the  trustee  must,  or  ordinarily  does  have,  in  connection 
with  the  management  of  the  trust  property. 

What  Pcwers  a  Trustee  has.  —  At  common  law  a  trus- 
tee, being  the  absolute  legal  owner  of  the  property,  could 
exercise  all  the  ordinary  powei's  which  an  absolute  owner 
might,  but  in  a  court  of  equity  the  rights  of  the  beneficiary 
are  paramount,  and  consequent!}-  a  trustee  will  be  restrained 
from  exercising  any  power  inconsistent  with  the  benefi- 
ciarj-'s  rights ;  hence  a  trustee  may  be  said  to  have  only 
those  powers  which  he  will  not  be  restrained  from  using. 

The  trustee  retains  in  equity  as  incidental  to  his  office 
certain  of  the  powers  which  are  his  at  law  as  owner  of  the 
property ;  he  has  also  those  additional  powers  which  are 
conferred  by  the  legislature  or  the  court,  and  those  powers 
which  are  conferred  by  the  trust  instrument. 

The  general  powers  incidental  to  the  office  are  limited 
to  and  comprise  all  those  that  are  necessary  to  the  per- 
formance of  his  duties,  such  as  power  to  demand,  receive, 
and  sue  for  the  trust  property  or  any  income  accruing  on 
it ;  to  invest  the  funds  and  lease  the  real  estate ;  to  take 
proper  measures  to  keep  the  real  estate  repaired  and  in- 
sured, and  to  defend  suits  against  him  in  respect  to  the 
propert}',  or  against  him  as  trustee ;  to  disburse  and  dis- 
tribute the  property' ;  to  protect  the  beneficiary,  or  main- 
tain him  if  incapable  of  maintaining  himself. 

The  powers  to  sell  the  trust  property,  and  to  change 
investments,  and  to  convert  real  into  personal  estate  and 
vice  versaj  are  usuall}-  bestowed  on  the  trustee  by  the 
legislature  or  court,  but  are  special,  and  not  general  and 
incidental  to  the  office,  since  the  original  conception  of  a 
trustee  was  some  one  to  be  trusted  with  the  title  to  the 
propertj',  and  not  a  sort  of  business  manager,  as  the  office 
has  more  and  more  become. 


46  A  trustee's  handbook. 

The  trust  instrument  itself  may,  and  usuallj'  does,  confer 
in  express  terms  the  powers  which  the  court  and  legislature 
give ;  and  it  usually  enlarges  the  general  powers  incidental 
to  the  office.  In  addition  it  frequently  gives  other  powers 
of  a  discretionary  character,  such  as  a  power  of  revocation 
of  the  trust,  or  a  power  of  appointment  as  to  distribution  of 
income. 

Implied  powers  are  also  often  given  by  the  trust  instru- 
ment where  it  places  a  dut}'  on  the  trustee,  and  neglects 
to  give  expressly  the  powers  to  perform  it ;  and  in  every 
such  case  the  trustee  will  take  by  implication  all  the 
powers  necessarj'  to  execute  his  duty.^  As,  for  instance, 
where  a  trustee  is  to  borrow  money  on  mortgage,  he  maj' 
give  a  mortgage  containing  a  power  of  sale,'^  or  where  he 
is  to  keep  the  estate  safely  invested  he  will  have  implied 
power  to  sell  hazardous  investments  left  by  the  maker  of 
the  trust. 

Vesting  of  Powers.  —  There  are  some  cases  in  which 
the  powers  incidental  to  the  office  do  not  vest  in  the  holder 
of  the  title.  For  instance,  where  the  ownership  vests  in  the 
heir  or  personal  representative  of  a  sole  trustee,  or  in  a 
stranger  b}'  a  conveyance  not  properly  authorized.  In  such 
cases  the  owner  will  be  a  trustee,  but  will  not  have  the 
usual  incidental  powers  to  manage  the  estate  ;  but  only  such 
powers  as  are  necessary  to  preserve  the  property  until  it 
can  be  convej-ed  to  a  properly  constituted  trustee.^ 

The  powers  will  vest  in  a  trustee  properly  appointed, 
and,  if  there  is  more  than  one  trustee,  in  all  the  trustees 
jointly. 

The  general  powers  will  pass  to  the  survivors  or  sur- 
vivor, and  will  vest  in  the  successors  in  the  trust ;  *  and 
this  notwithstanding  a  provision  for  the  keeping  up  of  the 

1  Infra,  p.  55.  2  Infra,  p.  61.  '  Supra,  p.  44. 

*  "Webster  v.  Vandeventer,  6  Gray,  428 ;  Belmont  v.  O'Brien,  12 
N.  Y.  394 ;  Nugent  v.  Cloon,  117  Mass.  219.  Statutes  in  many  jurisdic- 
tions to  same  effect. 


THE  INDIVIDUAL  AS  TRUSTEE.  47 

number  of  the  trustees.^  If,  however,  the  powers  are 
limited  to  "  my  trustees,"  they  have  been  held  not  to 
pass  to  a  single  survivor,  as  tlie  settlor  evidentlj-  meant 
to  trust  the  discretion  of  any  two  or  more,  but  not  of 
one  trustee.^ 

Special  powers  conferred  by  the  trust  instrument  upon 
the  trustees  in  that  capacit}-  will  pass  to  survivors  or 
successors ; '  but  if  they  are  a  personal  confidence  in  the 
individuals  who  are  nominated  trustees  they  can  only  be 
exercised  bj'  the  individuals  named,  and  so  will  not  sur- 
vive or  pass  to  successors.  If,  however,  the  limitation  is 
a  personal  confidence  to  the  trustees  by  name,  and  their 
heirs  and  assigns,  the  powers  will  pass  to  their  successors, 
but  not  to  their  personal  representatives.* 

Execution  of  Powers.  —  The  essential  part  of  the  exe- 
cution of  a  power  is  the  exercise  of  the  discretion  vested 
in  the  trustees.  As  this  discretion  vests  in  them  jointly,* 
it  can  only  be  executed  by  the  joint  action  of  all  the  trus- 
tees ;  and  an  execution  by  part,  even  though  a  majorit}', 
is  void,  unless  provided  for  by  the  instrument.®  Hence 
the  insanity  or  refusal  to  concur  of  one  trustee  can  block 
all  action,''  and  where  the  trustees  disagree,  the  only 
remedy  is  to  have  a  trustee  removed  and  a  new  one 
appointed,  which  the  court  will  not  do,  unless  the  conduct 
of  the  trustee  has  been  factions  and  unreasonable,  or  pro- 
moted by  corrupt  or  selfish  motives.' 

1  Hammond  v.  Granger,  128  Mass.  272;  Bailey,  Pet'r,  15  R.  I.  60. 

2  Hibbard  v.  Lamb,  Amb.  309.  Contra,  Franklin  v.  Osgood,  14 
Johns.  527. 

»  Wemyss  v.  White,  159  Mass.  484  ;  Schonler,  Pet'r,  134  Mass.  426. 

*  Wamecke  v.  Lembca,  71  III.  91. 

6  Stott  V.  Lord,  31  L.  J.  Ch.  391  ;  Ray  v.  Doughty,  4  Blackf.  115. 

«  Atty.  Gen.  v.  Gleg,  1  Atk.  356;  Morville  v.  Fowle,  144  Mass. 
109 ;  Vandever's  Appeal,  8  Watts  &  S.  405 ;  In  the  Matter  of  Wads- 
worth,  2  Barb.  Ch.  381. 

">  Swale  V.  Swale,  22  Bear.  584.     Supra,  p.  13. 

8  Norcum  v.  D'Oench,  17  Mo.  98.    Supra,  p.  21. 


48  A  trustee's  handbook. 

Must  be  Joint.  —  Trustees  are  joint  tenants  at  law, 
hence  one  of  them  may  give  a  debtor  a  good  discharge  if 
he  pays  his  debt  into  his  hand ;  ^  hence  one  trustee  may 
collect  dividends,  rents,  interest,  or  any  other  income 
accruing ;  and  he  may  receive  a  simple  debt  or  discharge 
a  mortgage.^  He  cannot,  however,  assign  a  mortgage,  as 
all  the  trustees  must  act  in  a  sale  or  assignment  of  the 
trust  property-,*  nor  could  he  collect  a  judgment,  as  all  the 
trustees  must  join  in  the  suit.*  Nor  can  one  trustee  bind 
all  by  a  compromise.^  Converselj',  as  he  may  collect  it 
alone,  so  one  trustee  may  pay  out  income,  but  in  dealing 
with  matters  of  principal  all  should  join.® 

In  equity  a  joint  receipt  is  required  ;  hence  if  the  debtor 
knows  that  the  trustee  is  committing  a  breach  of  trust  in 
receiving  the  mone}*,  or  if  he  has  been  warned  to  pay  to 
all  the  trustees  only,  he  will  not  be  protected  by  his  single 
receipt^ 

The  liability  of  one  trustee  for  allowing  his  co-trustee  to 
receive  or  have  the  custody  of  the  property  is  a  different 
question  and  is  treated  below.^ 

Delegation.  —  The  execution  of  a  power  in  its  essential 
part  cannot  be  delegated  either  to  a  stranger  or  by  one  of 
the  trustees  to  another.*  Nor  can  the  trustees  divest 
themselves  of  their  discretion  by  asking  the  advice  of  the 


1  Bowes  V.  Seeger,  8  Watts  &  S.  222. 

2  Ochiltree  v.  Wright,  1  Dev.  &  Bat.  Eq.  336.    Tnfra,  p.  75. 

8  Mendes  v.  Guedalla,  2  Johns.  &  Hem.  259;  Ridgley  v.  Jolmson,  11 
Barb.  527. 

4  Infra,  p.  64. 

6  Stott  V.  Lord,  31  L.  J.  Ch.  391. 

6  Infra,  p.  87. 

T  Lee  V.  Sankey,  L.  R.  15  Eq.  204 ;  Magnus  v.  Queensland  N.  Bk., 
37  Ch.  Div.  466  ;  Webb  v.  Ledsam,  I  K.  &  J.  385. 

8  Infra,  pp.  87,  88,  122  et  seq. 

•  Pearson  w.  Jamison,  1  McLean  (Ken.),  197;  Atty.  Gen.  v.  Gleg,  1 
Atk.  356 ;  Berger  v.  DufE,  4  Johns.  Ch.  368.  See  article  in  12  Central 
L.  J.,  266-270. 


THE  INDrVTDUAL  AS  TRUSTEE  49 

court*  Thus  a  trustee  cannot  appoint  an  agent  to  sell  the 
propert}'  ^  or  to  manage  the  real  estate,  or  hand  the  funds 
to  a  solicitor  to  invest,'  because  by  doing  so  he  delegates 
the  essential  part  of  his  power,  namely,  the  exercise  of  his 
discretion  in  determining  the  selling  or  letting  prices,  or 
the  need  of  repair,  or  the  appropriateness  of  the  security 
selected  for  investment.** 

This  does  not  prevent  the  trustee  from  intrusting  the 
unessentials  to  an  agent/  such  as  the  delivery  or  execu- 
tion of  a  deed  or  lease,  or  an}'  other  matter  not  requiring 
the  exercise  of  discretion,  unless  the  trust  instrument 
requires  his  personal  execution  of  these  unessential  mat- 
ters. A  convenient  mode  of  action  in  such  cases  is  to 
authorize  the  agent  to  contract  subject  to  the  assent  of 
the  trustee.* 

Hence  a  trustee,  having  fixed  the  terms  of  sale,  may  give 
his  attornej'  a  special  power  to  carr}'  out  the  sale  and  con- 
vey the  property ;  or  in  the  case  of  a  sale  of  stocks  may 
sign  a  special  power  of  attorne}'  in  blank  to  transfer  the 
stock,  and  the  transferee  will  not  be  put  on  his  inquirj',  as 
there  is  nothing  to  suggest  that  the  trustee  has  delegated 
his  discretion.  But  an  attempt  to  reach  the  same  results 
under  a  general  power  would  be  otherwise,  as  the  evident 
implication  is  that  the  trustee  has  not  passed  on  this  par- 
ticular case,  and  has  delegated  his  discretion  to  his  general 
attorney.' 

Fartlsil  or  Defective  Execution.  —  A  power  need  not 
be  executed  at  one  time,  and  if  it  he  onlj'  partially  ex- 
ecuted, the  execution  ma}'  be  completed  at  a  later  date.^ 

1  Trnst  Co.  v.  Sheldon,  59  Vt.  374. 
'  Berger  v.  Duff,  4  .Johns.  Ch.  368. 
8  Bostock  V.  Floyer,  L.  R.  1  Eq.  26, 

*  Woddrop  V.  Weed,  154  Pa.  St.  307. 

«  Gillespie  v.  Smith,  29  111.  473.    Infra,  pp.  58,  76. 

»  Hawley  v.  James,  5  Paige,  318,  487. 

'  Lowell,  Transfer  of  Stock,  §  76 ;  Hawley  v.  James,  tibi  supra, 

•  Sagden  on  Powers,  3d  Amer.  ed.,  i.  79-85. 

4 


60  A  trustee's  handbook. 

If  the  execution  is  defective,  the  court  will  compel  the 
trustee  to  complete  the  execution  in  favor  of  a  purchaser 
for  value,  or  one  having  a  meritorious  claim,  but  it  will  not 
aid  a  volunteer.^ 

If  in  essential  matters  the  power  is  substantially  ex- 
ecuted, the  court  will  confirm  the  execution,'^  but  if  in  non- 
essentials prescribed  by  the  trust  instrument  there  has  been 
an  error,  the  execution  is  absolutely  void,  and  the  court 
will  not  interfere.  Thus,  if  the  power  is  to  be  executed 
by  deed,  an  execution  by  parol  will  be  ineffective,  or  if  it 
is  to  be  executed  by  deed  witnessed  by  two  men,  a  deed 
witnessed  by  a  man  and  a  woman  will  not  do.'  Nor  could 
a  power  to  appoint  by  will  be  executed,  waived,  or  ex- 
tinguished in  any  other  way.  (a) 

If  the  validity-  of  a  special  power  be  dependent  on  a  con- 
dition, the  condition  must  be  proved  and  may  be  traversed, 
e.  g.  where  a  trustee  was  to  sell  land  to  support  the  bene- 
ficiary, where  there  proved  to  be  plenty  of  personalty,  it 
was  held  that  no  power  of  sale  ai'ose.* 

If  the  consent  of  a  beneficiary  is  a  condition  precedent, 
the  subsequent  ratification  will  not  be  sufficient,^  and  if  any 
party  die  whose  consent  is  necessar}',  the  power  will  be 
lost ; '  but  in  a  case  where  the  consent  of  a  class  of  bene- 
ficiaries was  required  to  protect  their  own  interests,  and 
they  all  died,  it  was  held  that,  as  there  were  no  interests  to 
be  protected,  the  power  had  become  unconditional,  and  the 
assent  was  no  longer  necessar}'  to  its  execution.'  And  in 
some  jurisdictions  it  is  provided  b}'  statute  that  where  the 
person  has  died  whose  consent  was  necessar}'  to  the  exe- 
cution of  the  power,  the  court  might  act  in  his  place.* 

1  See  page  58. 

2  Sugden  on  Powers,  3d  Amer  ed.,  i.  391  ;  Amer.  &  Eng.  Encyc. 
Law,  vol.  18,  p.  927. 

«  Sngden  on  Powers,  3d  Amer.  ed.,  i.  299, 300. 

*  Minot  V.  Prescott,  14  Mass.  495.        ^  Bateman  v.  Davis,  3  Mad.  98. 

•  Alley  V.  Lawrence,  12  Gray,  373. 

'  Leeds  Ex'r  v.  Wakefield,  10  Gray,  514. 

8  Mass.  Pub.  Stat.  (1882),  eh.  143,  §  2. 

(a)  Buggies  v.  Tyson,  81  N.  W.  Rep.  367  (Wise.  1899). 


THE  INDIVIDUAL  AS  TRUSTEE.  61 

So  too  a  decree  of  the  court  acting  by  statute  authority 
is  invalid  which  does  not  conform  to  the  statute  authoriz- 
ing it ;  since  the  court  can  only  execute  the  power  given  it 
by  statute,  and  is  not  itself  the  part^-  creating  the  right,  as 
it  is  where  it  acts  on  its  own  equitable  jurisdiction.^ 

Only  those  interested  can  object  to  the  execution  of  the 
power. 

Control  of  Court  over  Powers  that  it  is  the  Trustee's 
Duty  to  Exercise.  —  A  trustee  is  bound  to  use  a  sound 
discretion  in  the  execution  of  those  powers  which  are  inci- 
dental to  his  office,  or  which  are  conferred  on  him  b}^  the 
legislature  or  court ;  and  he  is  answerable  to  the  court  for 
a  failure  to  perform  his  duty.  Hence  the  court  will  inquire 
into  the  manner  in  which  he  has  executed  such  duties,  and 
will  hold  him  resiwnsible  if  he  has  not  used  sound  discre- 
tion ;  but  if  he  has  acted  in  good  faith,  without  an}'  selfish 
motive,  the  court  will  treat  him  with  indulgence,  and  espe- 
cially if  he  act  under  advice  of  counsel.'* 

It  is  said'  that  the  court  will  ratifj'  anything  which  it 
would  order  to  be  done,  but  this  is  not  quite  true,  since  a 
court  will  not  ratify  an  unauthorized  conversion,  and  it  is 
not  quite  safe,  since  a  court  may  not  look  at  the  matters 
just  as  the  trustee  does ;  hence,  if  a  trustee  has  an}'  doubt 
as  to  his  duty,  his  best  course  is  to  ask  the  instruction  of 
the  court  before  he  acts.* 

Control  of  Court  over  Discretionary  Powers. — The 

court  will  not  interfere  with  the  trustee's  action  where  he  has 
a  discretionary  power,  since  the  maker  of  the  trust  meant  to 
trust  to  the  conscience  of  the  trustee  and  not  of  the  court ; " 

1  Infra,  p.  55. 

2  Ellig  V.  Naglee,  9  Cal.  683 ;  Crabb  v.  Young,  92  N.  Y.  56. 
»  Perry,  §  476. 

*  Infra,  ^.  81. 

6  Portsmouth  v.  Shackford,  46  N.  H.  423 ;  Haydel  v.  Horck,  72  Mo. 
253;  Blythe  v.  Green,  38  Atl.  743  (N.  J.  Ch.). 


52  A  trustee's  handbook. 

and  a  trustee  cannot  divest  himself  of  his  discretion  by  con- 
sulting the  court.^ 

They  will  not  compel  an  execution,  since  it  is  a  mere 
matter  of  choice  with  the  trustee  whether  he  will  or  will 
not  act,  and  he  is  under  no  legal  obligation  to  do  either.^ 

If,  however,  the  execution  of  the  power  becomes  a  mat- 
ter of  litigation,  or  is  brought  into  court  for  execution,  the 
holder  can  only  exercise  it  with  the  court's  approval.* 

It  will  not  inquire  into  his  reasons  for  acting  or  not  act- 
ing, since  he  and  not  the  court  is  the  tribunal ;  *  but  if  the 
trustee  gives  his  reasons,  which  he  cannot  be  compelled  to 
do,  the  court  may  review  them,  and  if  it  finds  them  insuf- 
ficient may  reverse  his  action.^ 

If  the  discretion  given  the  trustee  is  to  act  on  his  "  good 
judgment,"  he  cannot  act  upon  his  mere  will  or  caprice,  and 
the  court  will  interfere  where  he  refuses  to  act  as  a  reason- 
able man,  but  is  influenced  by  hostility  to  the  person  to  be 
benefited  or  by  selfish  interest ;  ^  but  the  proper  remedy  in 
such  cases  is  the  removal  of  the  hostile  trustee,  rather  than 
a  request  to  the  court  to  change  his  determinations.'' 

It  is  provided  by  statute,  however,  in  two  jurisdictions, 
that  discretionary  power  is  presumed  to  be  subject  to  the 
control  of  the  court  if  not  reasonably  exercised.^  In  Cro- 
mie  V.  Bull,  81  Ky.  646,  the  court  claimed  the  right  to  in- 
terfere, but  did  not  exercise  it.  (a)  The  court  seems  to 
extend  its  control  to  the  extent,  and  only  to  the  extent,  of 
compelling  an  honest  and  bona  fide  exercise  of  the  power.® 

If  the  trustee  exercises  the  power  in  such  a  manner  as 

1  Trust  Co.  V.  Sheldon,  59  Vt.  374 ;  Proctor  y.  Heyer,  122  Mass.  525. 

2  Costabadie  v.  Costabadie,  6  Hare,  410;  Eldredge  v.  Heard,  106 
Mass.  579. 

3  Bull  V.  Bull,  8  Conn.  47 ;  Perry,  §  511. 
*  Re  Vanderbilt,  20  Hun  (N.  Y.),  520. 

8  Re  Beloved  Wilkes'  Charity,  3  McN.  &  G.  440,  448. 

6  Garvey  v.  Garvey,  150  Mass.  185. 

'  Wilson  V.  Wilson,  145  Mass.  490.     Supra,  p.  21. 

8  Comp.  Laws  Dak.  (1887),  3948;  Cal.  Civ.  Code  (1885),  §  2269. 

9  Tabor  v.  Brooks,  10  Ch.  Div.  273 ;  Bacon  v.  Bacon,  55  Vt.  243. 
(a)  See  also  Clark  v.  Clark,  50  N.  Y.  S.  1041. 


THE  INDIVIDUAL  AS  TBUSTEE.  63 

to  be  a  fraud,  the  court  can  on  that  ground  set  it  aside, 
having  the  usual  jurisdiction  to  remedy  a  fraud,  and  not 
because  it  has  jurisdiction  to  review  the  exercise  of  the 
power.  And  accordingly  the  person  attacking  the  exercise 
of  a  power  on  the  ground  of  fraud  must  prove  his  case 
affirmatively.^ 

What  amounts  to  Fraud  in  the  Execution  of  a  Power. 
—  If  the  trustee  exercise  an  unlimited  power  for  his  own 
gain,  or  to  get  an  advantage  for  himself  or  his  family*,  it 
will  be  a  fraud,  though  not  injurious  to  others.^ 

If  he  exercise  a  power  in  such  a  wa}-  as  to  defeat  the 
purposes  of  the  trust,  as,  for  instance,  if  under  a  power 
to  use  the  principal  for  the  support  of  the  beneficiary, 
he  paj's  the  whole  amount  over  at  one  time  for  the  pur- 
pose of  revoking  the  trust,  it  will  be  a  fraud.' 

If  he  exercise  a  power  for  corrupt  motives,  or  out  of 
spite  or  revenge,  the  execution  will  be  set  aside. 

Thus  where  a  trustee  appointed  a  double  portion  to  his 
son  to  avoid  a  lawsuit,  the  execution  was  set  aside.* 

Extinction  of  Powers.  —  A  power  may  become  extinct 
by  the  death  or  disclaimer  of  one  of  those  to  whom  it  is 
given ;  ^  but  it  cannot  be  waived  or  extinguished  as  against 
a  donee  who  is  not  a  party  to  the  waiver,  (a) 

A  power  cannot  be  exercised  after  the  trust  has  expired,' 
or  the  purposes  for  which  it  was  given  have  been  fulfilled 
or  become  impossible ;  as,  for  instance,  where  a  power 
was  given  to  sell  and  convert  into  cash  for  A,  and  A  had 
died.' 

A  power  will  not  be  exhausted  by  an  exercise  of  part ; 

1  T?e  Brittlebank,  30  W.  R.  99. 

2  Bostick  p.  Winton.  1  Sneed  (Tenn.),  524. 

'  Lovett  V.  Farnham.  169  Ma.s8.  1.    See  infra,  p.  69. 
*  Holt  r.  Hogan,  5  Jones  Eq.  (N.  C.)  82. 
'  Snjtra,  pp.  4,  46,  47. 
«  Frazer  v.  Western,  1  Barb.  Ch.  220,  240. 

'  Slocnm  V.  Slocnm,  4  Edw.  Ch.  613 ;  Lessee  of  Ward  v.  Barrows, 
2  Ohio  St.  241.     See  swpra,  p.  16. 

(a)  Haggles  v.  Tyson,  81  N.  W.  367  (Wise.  1899). 


64  A  tkustee's  handbook. 

but  where  the  court  gives  the  power  it  ma}'  be  otherwise. 
As,  for  instance,  if  part  of  a  tract  of  land  be  sold  under 
power  of  sale  at  one  time,  the  balance  may  be  sold  at  a 
later  date ;  or  if  a  power  of  appointment  fail,  it  may  be 
exercised  again. ^ 

m.    PARTICULAR  POWERS. 

Sale.  —  Power  of  Sale.  —  Although  a  power  to  sell  is 
one  of  the  most  important  powers  a  trustee  ma}'  have,  it 
is  not  a  general  power  incidental  to  his  ofl&ce,^  since  the 
original  theor}'  of  a  trust  did  not  contemplate  a  trustee's 
doing  anything  but  holding  and  taking  care  of  the  prop- 
erty, the  object  of  a  trust  then  being  to  avoid  feudal  dues 
and  forfeitures.^  At  the  present  day  the  usual  object  of  a 
trust  is  to  settle  property  in  the  hands  of  persons  of  good 
business  ability  to  manage  it  for  the  benefit  of  others  not 
possessed  of  such  ability  ;  or  to  settle  propert}-  so  that  it 
may  form  a  family  fund  to  descend  in  the  family  as  long 
as  it  can  be  tied  up,  and  so  that  the  property  ma}-  not  be 
dissipated  bj'  the  improvidence  or  bad  management  of  the 
persons  to  be  benefited ;  who  usually  are,  in  part  at 
least,  persons  unfitted  for  business  and  the  care  of  large 
estates. 

The  policy  of  the  modern  trust  is  to  give  the  trustees 
the  fullest  power  to  manage  the  estate  to  the  best  advan- 
tage, and  hence  a  power  of  sale  is  a  feature  of  all  well 
drawn  trust  instruments. 

In  some  jurisdictions  there  is  a  statutory'  provision  that 
every  will  shall  be  construed  to  give  the  trustees  power  to 
change  all  trust  investments.* 

*  Supra,  p.  49 ;  Sngden  on  Powers,  3d  Amer.  ed.,  p.  391. 

3  Wheate  v.  Hall,  17  Ves.  Jr.  80 ;  Jones  v.  Atch.,  Top.,  &  S.  Fe'  Rd., 
150Mas8.304;  Code  Ga.  (189.5),  §3172;  Ky.  Stat.  (1894),  §  2356. 

8  Lowell,  Transfer  of  Stock,  §  62. 

<  R.  L  Gen.  Laws  (1896),  ch.  208,  §  12  ;  Ky.  Stat.  (1894),  §  4707.  In 
New  York  power  of  sale  to  pay  collateral  inheritance  tax,  Rev.  Stat 
(1896),  p.  2857,  §  5. 


THE  INDIVIDUAL  AS  TRUSTEE.  55 

In  many  cases  where  the  power  is  not  expressly  given, 
it  will  be  implied  from  the  fact  that  the  trustee  is  given  a 
duty  which  cannot  be  performed  without  a  power  of  sale.^ 
As,  for  instance,  where  the  trust  was  to  pa}'  the  settlor's 
debts,  and  then  the  income  to  B,*  or  where  the  trustees 
were  to  invest  or  reinvest  in  safe  securities,'  or  where  they 
were  given  the  power  to  manage  and  invest,*  or  to  invest 
as  seems  prudent.®  So,  too,  where  the  maker  of  the  trust 
leaves  illegal  and  improper  investments,  the  trustees  have 
an  implied  power  to  sell.^  But  the  power  can  not  be  en- 
grafted on  to  the  trust  by  inserting  it  in  the  deed  of  a 
property  purchased  by  the  trustee,  (a) 

Sale  under  Statutes.  —  In  most  jurisdictions  power  is 
given  to  the  probate  court  by  statute  to  give  the  trustees  a 
license  to  sell,''  and  such  statutes  are  held  to  be  constitu- 
tional.^ In  such  cases  the  power  given  the  coUrt  is  subject 
to  the  same  general  rules  as  other  powers,  and  the  decree 
of  the  court  must  conform  to  the  statute,  and  not  exceed  it.' 

The  statutes  generally  provide  that  the  court,  on  the 
application  of  any  one  interested,  may  order  a  sale  if  the 
court  thinks  it  necessary  or  expedient,  and  provide  for 
notice  to  all  persons  in  interest,  and  the  appointment  of 
guardians  for  all  minors  or  persons  unascertained  or  not 
in  being. 

1  Supra,  p.  46  ;  Jones  v.  Atch.,  Top.,  &  S.  Y4  Kd.,  150  Mass.  304. 

2  Goodrich  v.  Proctor,  1  Gray,  567. 

*  Purdie  v.  Whitney,  20  Pick.  25. 

♦  Harvard  College  o.  Weld,  159  Mass.  114. 

6  Boston  Safe  Deposit  Co.  v.  Mixter,  146  Mass.  100. 

«  Bohlen's  Est.,  75  Pa.  St.  304. 

T  Mas8.Pub.Stat.  (1882),  ch.  141,  §§20,  22;  Gen.  Stat.  Conn.  (1888), 
§§  494,  779  ;  Laws  of  Del.  (1893),  p.  721  ;  Code  Ga.  (1895),  §  3172 ; 
Rev.  Stat.  Me.  (1883),  ch.  68,  §  11 ;  Pub.  Stat.  N.  IT.  (1891  ),ch.  198,  §  10; 
Stat.  Vt.  (1894),  §  2617;  Code  Va.  (1887),  §§  2616-2622;  Annot.  Stat. 
Wise.  (1889),  §§  2100a,  4030;  Rev.  Stat.  N.  Y.  (1896),  p.  1799,  §  65; 
Rev.  Stat.  Ind.  (1894),  §§  3411,  3415. 

»  Norris  v.  Clymer,  2  Pa.  St.  277. 

•  WiUiamson  v.  Berry,  8  How.  495,  531. 

(a)  Stone  v.  Kahle,  54  S.  W.375  (Texas,  1899). 


56  A  trustee's  handbook. 

Such  statutes  do  not  give  the  court  power  to  act  in  disre- 
gard of  the  testator's  wishes,^  and  the  fact  that  the  income 
will  be  increased  is  not  a  sufficient  reason  to  decree  a  sale.^ 

Where  there  is  no  general  statute,  the  legislature  may 
authorize  a  sale  b}'  special  act,  and  often  does  so,®  but 
even  a  sale  under  special  act  of  the  legislature  in  direct 
controversion  of  the  settlement  has  been  held  void  in 
Pennsj'lvania ;  *  but  elsewhere  a  special  act  for  a  sale, 
though  contrary  to  the  testator's  intentions,  has  been  held 
constitutional,  as  a  change  of  investment,  where  adequate 
provision  is  made  to  protect  the  interests  of  all  persons 
interested  in  the  trust. ^ 

Moreover,  where  it  is  impossible  to  use  the  property-  so 
as  to  carry  out  the  testator's  wishes,  the  court  without  an 
act  of  the  legislature  may  order  a  sale  on  the  cy  prcs  doc- 
trine,' and  if  all  parties  in  interest  were  parties  to  the  suit, 
or  represented  hy  guardian,  it  is  difficult  to  see  what  rem- 
edy they  would  possess  at  a  later  time,''  and  the  trust 
passes  from  the  property  sold  to  the  fund  received  in  its 
place.* 

There  are  statutes  authorizing  the  court  to  order  such 
sales,  and  sales  of  estates  which  are  subject  to  contingent 
remainders  or  executor}-  devises  in  some  jurisdictions,' 
and  providing  for  the  appointment  of  guardians  to  represent 
persons  who  are  unascertained  or  not  in  being. 

If  such  persons  are  not  represented,  the  sale  is  of  no 

1  Johnstone  v.  Baber,  8  Beav.  233. 

2  Davis,  Pet'r,  14  Allen,  24. 

8  Stanley  v.  Colt,  5  Wall.  119. 

*  Ervine's  Appeal,  16  Pa.  St.  256. 

6  Clarke  v.  Hayes,  9  Gray,'426 ;  Leggett  v.  Hunter,  19  N.  Y.  445 ; 
Norris  v.  Clymer,  2  Pa.  St.  277. 

6  Weeks  v.  Hobson,  150  Mass.  377;  Ryan  v.  Porter,  61  Tex.  106; 
Atty.  Gen.  v.  Briggs,  164  Mass.  561. 

''  Baker  v.  Lorillard,  4  Comst.  257  ;  Ansley  v.  Pace,  68  Ga.  403. 

8  Cowman  v.  Colquhoun,  60  Md.  127. 

»  Mass.  Pub.  Stat,  (1882),  ch.  120,  §  19;  Gen.  Laws  R.  I.  (1896), 
ch.  201,§  18. 


THE  INDIVIDUAL  AS  TRUSTEE.  67 

effect,  SO  far  as  they  are  concerned,  should  they  afterwards 
become  entitled.^ 

Power  of  Court  of  Equity  to  decree  a  Sale.  —  Where 
there  is  no  statute  giving  any  court  power  to  decree  a  sale, 
a  court  of  equity  or  an}-  court  having  the  power  to  regu- 
late trusts  may  do  so  as  one  of  its  ordinary'  powers  ;  ^  but 
where  such  a  statute  exists,  the  court  would  onlj'  act  under 
and  to  the  extent  of  the  statute. 

Where  there  is  no  statute,  a  court  of  equity  will  decree 
a  sale  only  where  the  trust  cannot  otherwise  be  carried  out, 
or  where  a  sale  is  necessarj*  to  preserve  the  property ; ' 
that  such  a  sale  would  be  beneficial  to  all  concerned  is  not 
suflScient  ground  of  action,  and  a  minor  or  person  unascer- 
tained might  object  on  becoming  sui  juris  or  vested  with 
the  estate.* 

It  is  said  that  a  court  will  not  confirm  an  unauthorized 
sale  even  though  it  would  have  authorized  it  had  it  been 
consulted  ;  but  if  there  was  no  time  to  get  leave  of  court, 
and  the  sale  was  necessar}'  to  preserve  the  property,  the 
court  would  undoubtedly  ratif)'  it  as  the  trustee  had  power 
to  make  it  ex  necessitate. 

Execution  of  the  Power.  —  The  management  of  the 
sale  requires  discretion,  and  hence  cannot  be  delegated. 
Where  the  trustee  sells  at  private  sale  he  must  arrange  the 
terms  himself,  or  his  agent  may  arrange  them  subject  to 
his  approval. 

It  is  settled  law  in  Missouri  that,  even  though  the  sale  is 
at  auction,  he  should  attend  in  person  to  decide  any  ques- 
tion arising  on  the  spot,  such  as  an  adjournment  or  the 

1  Baker  v.  Lorillard,  4  Comst.  257.  But  see,  contra,  Schley  v.  Brown, 
70  Ga.  64,  where  it  was  decided  that  persons  unascertained  and  not  in 
being  are  not  neccBsarv  parties ;  but  in  this  case  a  special  power  was 
given  by  the  will  to  the  court,  and  bo  the  parties  were  immaterial.  See 
infra,  p.  82. 

2  Old  South  Soc  V.  Crocker,  119  Mass.  1. 

»  Blacklow  V.  Laws,  2  Hare,  40 ;  Rnggles  v.  Tyson,  79  N.  W.  766 
(Wise.  1899). 

*  Baker  v.  Ix)rillard,  ubi  supra ;  Ansley  r.  Pace,  68  Ga.  403 ;  Johns 
P.Johns,  172  111.472. 


58  A  trustee's  handbook. 

acceptance  of  a  bid,^  but  the  usual  practice  is  not  so  strict 
in  most  jurisdictions.  Once  liaving  successfully  attended 
to  the  details,  he  need  not  deliver  the  deed  in  person  if  he 
takes  proper  precautions  to  secure  the  purchase  money. 

The  sale  must  be  carried  out  in  the  manner  prescribed 
in  the  trust  instrument  or  decree  from  which  the  authority 
is  derived  ;  and  any  error  or  omission  will  vitiate  the  sale, 
and  it  may  be  disatfirmed.'-^  For  instance,  if  the  power  be 
to  sell  for  cash,  a  sale  for  credit  cannot  be  made,^  nor  will  a 
power  to  sell,  exchange,  or  dispose  of  justify  a  trustee  in  or- 
ganizing a  corporation  and  transferring  the  property  to  it, 
taking  payment  in  shares,  (a)  If  the  power  be  to  sell  the 
whole  estate,  a  partial  interest  such  as  a  life  interest,  or  a 
right  to  mine  or  cut  timber  could  not  be  sold ;  but  an  author- 
ity to  sell  the  whole  estate  will  not  prevent  a  sale  by  lots.* 

If  every  essential  requisite  has  been  substantially  ful- 
filled, the  court  will  affirm  the  sale,  even  though  there  may 
have  been  some  irregularity,  such  as  an  immaterial  error 
in  the  description  or  advertisement,^  or  appearance  of  a 
party. 6  And  in  some  jurisdictions  there  are  statutory  pro- 
visions providing  that  the  title  of  a  purchaser  from  a 
licensee  of  a  competent  court,  who  has  given  bond  and 
due  notice  of  the  sale,  shall  not  be  set  aside  for  irregularity 
in  the  proceedings.'' 

The  trustee  cannot  purchase  directly  or  indirectly  either 
for  himself  or  another  at  the  sale,  but  if  he  himself  be- 
comes the  purchaser  the  sale  may  be  disaffirmed,^  but  in 
that  case  the  purchase  mone}'  must  be  refunded. ^ 

If  there  is  an}'  fraud,  such  as  inadequate  notice,  or  if  the 
selling  price  is  wholly  inadequate,  so  that  it  amounts  to  a 
fraud,  the  sale  may  be  disaffirmed.^" 

1  Graham  v.  King,  50  Mo.  22.  ^  Knox  v.  Jenks,  7  Mass.  488. 

8  Waterman  v.  Spaulding,  51  111.  425. 

*  Ord  V.  Noel,  5  Madd.  438.  ^  Knox  v.  Jenks,  7  Mass.  488. 

6  Mercier  v.  West  Kansas  Land  Co.,  72  Mo.  473. 

7  Mass.  Pub.  Stat.  (1882),  ch.  142,  §  18. 

8  See  supra,  p.  27.  »  Infra,  p.  142. 
M  Oliver  v.  Court,  8  Price,  127,  165. 

(a)  Garesche  v.  Levering  Investment  Co.,  146  Mo.  436. 


THE  INDIVIDUAIi  AS  TRUSTEEl  59 

The  purchaser  must  ascertain  at  his  peril  that  the  power 
of  sale  arose/  and  that  it  has  been  properly  carried  out, 
and  if  conditions  are  attached  to  the  power  he  must  see 
that  the}-  are  properl}'  performed.  He  will  be  liable  if  he 
have  notice  that  the  trustee  has  not  exercised  a  personal 
discretion,  but  has  delegated  his  duty  to  an  agent,  as,  for 
instance,  if  he  purchase  from  an  agent  under  a  general 
power  of  attorney ;  ^  but  the  determination  of  the  court 
that  a  sale  is  proper  will  protect  him.  Where  the  sale  is  a 
breach  of  trust,  the  purchaser  will  be  liable  not  only  for  the 
purchase  price,  but  also  for  damages  ;  and  he  cannot  com- 
pel the  trustee  to  carry  out  a  contract  that  is  a  breach  of 
trust,  since  equity  would  not  compel  the  trustee  to  do 
wrong,*  but  he  may  get  damages  at  law  from  the  trustee 
individually  for  the  breach  of  the  contract.* 

Application  of  the  Purchase  Money.  —  The  general 
rule  is,  that  where  the  settlor  or  court  has  intrusted  the 
funds  to  the  trustee,  as  for  instance  where  the  investment 
requires  time  and  discretion,*  or  if  he  has  a  general  power 
of  sale,'  the  purchaser  need  not  see  to  the  application  of 
the  purchase  mone}'.  If  the  sale  is  b}'  order  of  court,  he 
need  not  see  to  the  application  of  the  purchase  money  un- 
less required  to  do  so  by  the  decree  ; '  but  if  the  funds  are 
to  be  applied  in  a  particular  manner  at  a  definite  time,  or 
if  he  knows  that  the  trustee  intends  to  misappl}-  them,  he 
will  be  liable  if  he  neglects  seeing  that  the}'  are  properly 
applied,  as,  for  instance,  where  the  trustee  took  a  note  and 
discounted  it  for  his  own  benefit.* 

1  Caasell  v.  Ross,  33  111.  244 ;  Ord  v.  Noel,  5  Madd.  438 ;  Third  Nat. 
Bank  v.  Lange.  51  Md.  138. 

2  Supra,  p.  49. 

«  White  V.  Cuddon,  8  CI.  &  Fin.  766. 

♦  Mortlock  V.  Buller,  10  Ves.  Jr.  292. 

*  Wormley  v.  Wormley,  8  Wheat.  421. 
«  Lowell,  Transfer  of  Stock,  §  77. 

'  Coombs  V.  Jordan,  3  Bland,  284 ;  Wilson  v.  Davlsson,  2  Rob.  (Va.) 
384,412;  Perry,  §  798. 

*•  Third  Nat.  Bank  v.  Lange,  51  Md.  138. 


60  A  trustee's  handbook. 

If  the  purchaser  has  paid  in  such  manner  that  the  funds 
might  be  properly  invested/  he  is  not  liable ;  but  where 
he  paj's  in  an  improper  manner,  so  that  he  has  notice  of 
the  contemplated  breach  of  trust,  he  is  liable  for  it.'^ 

In  England,  and  man\-  of  our  States,  he  is  exempted  by 
statute  from  seeing  to  the  application  of  the  funds.® 

Pledge  or  Mortgage.  —  The  trustee  has  no  power  to 
pledge  or  mortgage  the  trust  property  incidental  to  his 
office,  and  the  power  has  not  been  usually  given  him  by 
the  settlement  or  b}'  the  legislature ;  but  of  late  j'ears 
this  power  has  been  more  frequently'  given  to  enable  the 
trustee  to  improve  the  real  estate.* 

In  the  absence  of  statute,  the  court  will  not  order  a 
pledge  or  mortgage  unless  it  is  essential  to  carry  out  the 
purposes  of  the  trust, ^  and  in  such  cases  the  authority  is 
reall}'  an  implied  one  given  by  the  instrument.® 

If  the  trustee  has  power  to  "sell  and  dispose  of"  the 
property,  he  will  have  an  implied  power  of  mortgage,'  and 
it  is  said  that  where  a  trustee  has  a  power  of  sale,  he  will 
also  have  the  power  to  pledge ;  ®  but  the  better  opinion 
seems  to  be  that  a  mere  power  of  sale  does  not  confer 
the  power  to  pledge.^ 

1  Keane  r.  Kobarts,  4  Madd.  332,  356. 

2  Pell  V.  De  Winton,  2  DeG.  &  J.  13;  Wormeley  v.  Wormeley,  1 
Brock.  U.  S.  C.  C.  330;  S.  C,  8  Wheat.  421.  Whole  subject  treated  in 
Underhill,  356,  n.     Barroll  v.  Forman,  88  Md.  188. 

8  Code  Ala.  (1896),  §1039;  Civ.  Code  Cal.  (1885),  §2244  ;  Rev.  Stat. 
Ind.  (1894),  §  3399;  Gen.  Stat.  Kan.  (1889),  §  7167;  Ky.  Stat.  (1894), 
§  4846;  Annot.  Stat.  Mich.  (1882),  §  5584;  Rev.  Stat.  Mo.  (1889), 
§  8691;  Stat.  Minn.  (1894),  §  4295;  Code  N.  Dak.  (1895),  §  4277; 
Annot.  Stat.  Wise.  (1889),  §  2092  ;  Rev.  Stat.  N.  Y.  (1896),  p.  1801,  §  66. 

*  Mass.  Pub.  Stat.  (1882),  ch.  141,  §  23;  Rev.  Stat.  N.  Y.  (1896), 
p.  1799,  §  6.5. 

6  U.  S.  Trust  Co.  V.  Roche,  41  Hun  (N.  Y.),  549. 

«  Miller  v.  Red  wine,  75  Ga.  130. 

'  Waterman  v.  Baldwin,  68  Iowa,  255. 

8  Lowell,  Transfer  of  Stock,  §  75. 

»  Loring  v.  Brodie,  134  Mass.  453. 


THE  INDIVIDUAIi  AS  TRUSTEE.  61 

The  same  remarks  that  apply  to  the  execution  of  a 
power  of  sale  apply  to  this  power,  except  that,  as  this 
power  is  more  unusual,  the  pledgee  will  be  holden  to  more 
care  than  a  purchaser.^ 

If  the  trustee  have  a  power  to  mortgage,  he  may  give  a 
power  of  sale  mortgage,  although  he  has  no  power  to  sell ;  ^ 
since  without  such  a  power  of  sale  the  mortgage  would  be 
unmerchantable,  and  he  will  take  by  implication  the  power 
to  give  a  merchantable  mortgage,  or  one  in  the  usual 
form.* 

Partition  and  Exchange.  —  A  partition  or  exchange 
can  be  made  by  express  authority  in  the  instrument,  or 
they  may  be  indirectly  effected  under  an  ordinary  power 
of  sale  and  reinvestment,*  although  a  power  of  sale  and  a 
power  to  sell  and  exchange  do  not  include  a  partition.* 

If,  however,  the  power  of  sale  is  restricted  to  sales  for 
cash,^  or  the  reinvestment  is  restricted,  the  partition  or 
exchange  could  not  be  made  in  this  way.' 

Leasing.  —  The  trustee  has  the  power  to  lease  the  real 
estate  as  a  general  power  incidental  to  his  office,  for  such 
terms  as  are  customary',  since  it  is  his  duty  to  get  the  cus- 
tomary return  from  the  property.^ 

These  leases  are  binding  on  the  estate  for  their  whole 
term,  even  though  the  trust  may  terminate  during  the 
term  of  the  lease,  and  the  remainderman  is  bound  by 
them  ;  ^  but  if  the  trust  must  terminate  at  a  given  time,  as, 

1  Lowell,  Transfer  of  Stock,  §  75. 

a  Bridges  u.  Longman,  24  Beav.  27 ;  Re  Chawner's  Will,  8  L.  R.  Eq. 
569. 

'  Lewin,  p.  472. 

*  McQueen  v.  Farqnhar,  1 1  Ves.  Jr.  467. 
'  Bradshaw  v.  Fane,  3  Drew.  534. 

»  Borel  r.  Hollins,  30  Cal.  408. 

T  Cleveland  v.  State  Bank,  16  Ohio  St.  236. 

8  Greason  r.  Keteltas.  17  N.  Y.  491. 

*  Greason  v.  Keteltas,  ubi  supra ;  Kent's  Commentaries,  vol.  iv.  pp. 
106-108.  But  under  the  present  statute  law  in  New  York  the  leiii>e  is 
only  binding  during  the  duration  of  the  trust.  In  re  McC'affrey,  50 
Hun,  371  i  In  re  Armory  Board,  60  N.  Y.  S.  882. 


62  A  trustee's  handbook. 

for  instance,  on  A's  becoming  of  age,  the  trustee  has  no 
power  to  make  a  lease  extending  beyond  that  time,  and 
any  lease  made  by  a  trustee  beyond  his  power  will  termi- 
nate with  his  estate,  and  will  not  bind  the  remainderman. 

A  trustee  has  no  power  to  make  a  lease  to  begin  at  a 
future  day,*  nor  to  bind  the  estate  b}"  a  covenant  of  re- 
newal which  will  extend  the  whole  term  be.yond  the  term 
for  which  he  has  power  to  lease,  but  may  make  reasonable 
covenants  of  renewal  to  the  same  extent  as  he  might 
lease.'^ 

It  is  often  difficult  to  determine  what  is  a  customary 
term,  and  it  is  a  question  of  fact  in  each  case  to  be  ascer- 
tained b}-  careful  inquirj-,  and  must  necessarily'  differ 
somewhat  according  to  the  location  and  the  character 
of  the  property  let.* 

Twenty  years  has  been  considered  a  reasonable  term 
for  business  property,  and  farming  property  is  often  let  on 
even  a  longer  term.  There  is  one  case  where  a  lease  of 
ninety-nine  years  was  approved,  but  the  circumstances 
were  peculiar.* 

A  trustee  ma}'  not  make  a  building  lease,  because,  al- 
though such  leases  may  be  in  one  sense  of  the  word  cus- 
tomary, they  do  not  fall  within  the  class  of  leases  which 
are  covered  b}'  the  power  incidental  to  the  office. 

In  a  building  lease,  part  of  the  rent  is  the  consideration 
of  the  tenant's  improving  the  property*,  and  these  improve- 
ments, which  do  not  benefit  the  lessor  until  the  end  of  the 
terra,  accrue  entirelv  to  the  remainderman,  but  are  paid 
for  by  the  life  tenant  by  the  use  of  the  property'  at  a  less 
rent  during  his  life. 

All  these  rules  may  be  modified  by  the  provisions  of  the 
trust  instrument,  giving  the  trustee  a  special  power  to  lease 

1  Sinclair  v.  Jackson,  8  Cow.  543,  581. 

2  Newcomb  v.  Keteltas,  19  Barb.  608 ;  Bergengren  v.  Aldrich,  139 
Mass.  259. 

*  Newcomb  v.  Keteltas,  19  Barb.  608. 

*  Black  V.  Ligon,  Harp.  Eq.  205. 


THE  INDrVTDUAI.  AS  TRUSTEE.  63 

in  addition  to  the  general  power  he  has  by  virtue  of  bis 
office,  so  that  it  ma}-  be  lawful  for  the  trustee  to  grant 
covenants  of  renewal,  or  make  building  leases  or  leases 
of  unusual  length,  and  if  the  trustee  be  given  a  power  to 
lease  for  a  speciQed  number  of  years,  any  term  less  will 
be  a  good  execution  of  the  power,^  and  if  he  exceed  that 
term  the  lease  will  be  good  to  the  extent  of  the  authority.'' 

If  the  beneficiaries  have  acquiesced  in  an  improper  lease, 
and  received  the  rents  for  a  long  time,  they  will  not  be 
heard  to  object;  but  this  is  merely  a  matter  of  reraed}' 
against  them,  and  does  not  make  the  lease  valid  if  invalid, 
as  the  beneficiary  has  no  right  to  make  or  unmake  leases.* 

The  trustee  will  be  personally  liable  on  the  covenants 
in  a  lease  unless  there  be  an  express  provision  to  the  con- 
trary, and  as  a  covenant  of  quiet  enjoyment  is  implied  in 
every  lease,  the  matter  of  what  risks  he  assumes  should  be 
carefullj'  considered.* 

To  Sue  and  Defend.  —  The  trustee  has  the  duty  of 
gathering  in  and  protecting  the  trust  propert}' ;  hence  he 
has  power  to  sue  for  it  or  for  an3'  damage  to  it,  and  to 
defend  suits  in  which  it  is  involved,  or  in  which  he  is  in- 
volved as  trustee,^  and  to  employ  counsel  and  incur  all 
necessar}'  expenses  at  the  expense  of  the  trust  fund, 
whether  successful  or  not  in  the  litigation,  unless  he  has 
been  improvident  or  unwise.  These  expenses  are  allowed, 
not  only  in  cases  directly  affecting  the  property,  but  also 
where  the  trustee  has  acted  with  reasonably  good  faith  in 
attempting  to  protect  the  beneficiary  himself;  as,  e.  g., 
where  he  has  attempted  though  unsuccessfully  to  have 
him  adjudged  insane.' 

1  Isherwood  v.  Oldknow,  3  M.  &  S.  382. 

2  Powcey  V.  Bowen,  1  Ch.  Ca.  23. 

»  4  Kent  Cora.  107 ;  Black  v.  Ligon,  Harp.  Eq.  205. 
*  Supra,  p.  24.  *  Supra,  p.  23. 

»  Chester  v.  Rolfe,  4  DeG.,  M.  &  G.  798 ;  supra,  p.  29 ;  Nelson  v 
Doocombe,  9  Beav.  211. 


64  A  trustee's  handbook. 

If  the  trust  fund  is  insufficient,  he  may  require  in- 
demnity. 

All  the  trustees  must  join  or  be  joined,  but  the  bene- 
ficiaries need  not,^  unless  they  are  not  adequately  repre- 
sented by  the  trustees ;  but  they  should  be  notified  of  a 
suit  hostile  to  their  title." 

The  demand  of  one  trustee  is  sufficient,  and  notice  to  one 
trustee  is  sufficient,  but  neither  the  admissions  of  one  of 
several  trustees,'  nor  the  erroneous  representations  of  one 
of  several  trustees,  will  bind  his  co-trustees  or  the  estate.* 
A  compromise  of  one  of  several  trustees  will  not  bind  the 
estate.* 

The  admissions  of  the  beneficiary  will  not  defeat  the 
trustee's  title.^ 

The  trustee  may  compromise  or  submit  doubtful  cases 
to  arbitration,'  and  in  some  jurisdictions  trustees  are  em- 
powered b}'  statute  to  compromise  or  submit  to  arbitration 
with  the  approval  of  the  court.*  A  court  of  equitj'  would 
have  the  same  power  where  there  is  no  statute. 

The  trustee  should  never  compromise  a  suit  unless  it  is 
decidedly  for  the  benefit  of  the  trust  estate,^  and  unless 
his  right  is  doubtful,  and  the  result  of  litigation  dubious, 
and  in  compromising  a  claim  he  should  show  a  strong 
probability  that  it  could  not  be  recovered  in  full.^° 

^  Generally,  but  expressly  by  statute  in  many  jurisdictions.  Supra, 
p.  23. 

2  Mackey's  Adm'r  i;.  Coates,  70  Pa.  St.  350. 
8  Vandever's  Appeal,  8  Watts  &  S.  405. 

*  Low  V.  Bouverie,  3  Ch.  D.  1891,  p.  82. 

6  Scott  V.  Lord,  31  L.  J.  Ch.  391 ;  Boston  v.  Bobbins,  126  Mass. 
384. 

*  Pope  V.  Devereux,  5  Gray,  409. 

'  Chadbourn  v.  Chadhourn,  9  Allen,  173. 

8  Mass.  Pub.  Stat.  (1882),  ch.  142,  §  12;  Gen.  Stat.  Conn.  (1888), 
§595;  CodeGa.  (1895),  §§  3429,3430;  Gen. Laws  R.  I.  (1896), ch. 208, 
§§  13,  18 ;  Rev.  Stat.  Me.  (1883),  ch.  68,  §  10.  Such  statutes  held  con- 
stitutional.     Clarke  v.  Cordis,  4  Allen,  466. 

9  EUig  V.  Naglee,  9  Cal.  683. 

W  Ames,  494,  n.    Infra,  p.  85,  as  to  duties  in  such  matters 


THE  INDIVIDUAL  AS  TRUSTEE.  65 

To  Contract.  —  If  the  trustee  has  the  power  to  do  the 
act  which  he  contracts  for,  he  can  bind  the  trust  estate 
and  his  successor  in  the  trust  (but  not  the  beneficiary  ^) 
by  his  express  contract.^ 

Ordinarily  the  trustee  only  is  bound  whether  he  describes 
himself  as  "trustee"  or  not,®  and  the  remedy  for  breach 
of  contract  is  against  him  personally,  and  the  trust  estate 
is  reached  only  through  subrogation  to  the  trustee's  right 
to  indemnity  ;  *  but  if  it  is  expressly  contracted  that  the 
trust  estate  shall  be  liable,^  or  if  the  contract  is  such  a  one 
as  would  be  implied  by  law,  such  as  a  contract  to  pay  for 
repairs,®  or  beneficial  improvement  to  the  trust  property, 
and  the  trustee,  being  dead  or  beyond  the  jurisdiction,  can 
not  be  reached,  the  trust  estate  itself  will  be  charged/ 

Thus  a  trustee  with  power  of  sale  could  make  a  valid 
contract  to  sell  the  trust  property  which  could  be  spe- 
cifically enforced,*  but  he  could  not  give  an  option  for  a 
sale  at  a  distant  date,  since  he  cannot  decide  in  advance 
that  the  circumstances  will  justify  a  sale.® 

Thus  also,  in  those  States  where  the  trustee  is  given 
the  powers  of  a  general  agent,"  or  where  he  is  authorized 
by  will  to  carry  on  the  testator's  business,  he  may  con- 
tract, and  bind  not  only  the  funds  invested  in  the  busi- 
ness, but  even  the  general  funds  of  the  trust  estate.  ^^ 

1  Everett  v.  Drew,  129  Mass.  150. 

2  Buahong  v.  Taylor,  82  Mo.  660  ;  Poindexter  v.  Barwell,  82  Va.  507. 
8  Taylor  v.  Davis,  110  U.  S.  330  ;  Perry,  §  437  b  ;  infra,  p.  120. 

*  Connally  v.  Lyons,  82  Texas,  664  ;  Mitchell  v.  Whitlock,  121  N.  C. 
166;  Mulrein  v.  Smillie,  25  App.  Div.  Rep.  135  (N.  Y.  1898) ;  Everett 
V.  Drew,  129  Mass.  150. 

6  Mulrein  v.  Smillie,  ut  supra;  New  v.  NicoU,  73  N.  Y.  127;  Under- 
bill, p.  346. 

«  Whittier  v.  Child,  174  Ma«8.  36;  Cheatham  v.  Rowland,  92  N.  C. 
340;  Mannix  v.  Purcell,  46  Ohio  St.  102,  pp.  117  and  147. 

T  Field  V.  Wilbur,  49  Vt.  157. 

8  Yerkes  v.  Richards,  170  Pa.  St.  347. 

»  In  re  Armory  Board,  60  N.  Y.  S.  882. 

w  Comp.  Laws  Dak.  (1887),  §  3946;  Rev.  Code  N.  Dak.  (1895), 
§  4289  ;  Civ.  Code  Cal.  (1885).  §  2267. 

"  Packard  v.  Kingman,  109  Mich  497;  North  American  Coal  Ca 
V.  Dyett,  7  Paige,  9. 


66  A  trustee's  handbook. 

Maintenance  and  Support.  —  The  trustee  has  a  general 
power  incidental  to  his  office  to  maintain  and  support  his 
beneficiary.  The  power  is  coextensive  with  the  dut}', 
which  is  treated  farther  on.* 

He  very  commonly  also  has  a  special  power  given  him 
to  apply  the  income  of  the  property  to  the  maintenance 
and  support  of  the  beneficiarj',  instead  of  paying  it  to  him 
directly,  the  object  being  to  enable  the  beneficiary-  to  enjoy 
the  property  in  spite  of  his  creditors.  The  extent  to 
which  a  valid  power  of  this  kind  can  be  granted  is  treated 
later.^ 

This  special  power  is  usually  discretionary  to  the  fullest 
■extent,  the  trustees  being  given  the  power  to  select  the 
persons  to  whom  the  income  is  to  be  paid  or  to  accumulate 
it  in  their  discretion. 

In  such  a  case  none  of  the  possible  recipients  is  entitled 
to  anything,  or  has  any  real  interest  in  the  trust ;  *  and  so 
long  as  the  trustee  applies  the  income  within  the  limits 
assigned,  the  court  will  not  inquire  into  his  motives  or 
revise  his  acts. 

If,  however,  he  is  prejudiced  and  cannot  fairly  exercise 
the  power,  he  ma}'  be  removed  from  his  office  of  trustee, 
and  this  is  the  only  remedy  the  beneficiar}'  will  have,  and 
he  is  interested  to  that  extent.* 

In  such  trusts  the  court  considers  that  the  power  should 
be  exercised  primarily  for  the  support  of  the  beneficiary,^ 
but  it  will  only  interfere  to  remove  a  trustee  who  acts 
from  caprice  or  mere  will,  or  from  improper  and  selfish 
motives,  instead  of  discretion  and  judgment,  and  not  to 
revise  his  acts.' 

So,  too,  a  power  is  often  expresslj'  given  to  apply  such 
part  of  the  principal  as  either  the  trustee,  or  in  many 

1  Infra,  p.  69.  '  Infra,  pp.  136  et  seq. 

'  But  see  below. 

*  Wilson  V.  Wilson,  145  Mass.  490.  But  it  has  been  held  that  court 
can  compel  the  trustee  to  act  or  execute  the  trust  itself.  Blythe  v. 
Green,  38  Atl.  Rep.  743  (N.  J.  Ch.). 

6  May  V.  May,  109  Mass.  252. 

6  Wilson  i;.  Wilson,  145  Mass.  490,  492. 


THE  INDIVIDUAL  AS   TRUSTEE.  67 

cases  as  the  beneficiaiy,  may  deem  necessarj^  for  his  com- 
fort and  support.  The  amount  spent  b}-  whoever  has  the 
power  of  deciding  what  is  needed  "  must  be  founded  on  a 
reasonable  judgment,  dealing  with  existing  facts  and  rea- 
sonable anticipations  of  the  future,  and  having  a  due  regard 
for  the  purposes  for  which  the  power  was  givei?,  and  also 
for  the  rights  of  those  whose  interests  are  injuriously 
affected  by  its  exercise " ;  ^  and  an  exercise  of  such  a 
power  to  draw  all  the  funds  out  of  the  trust  so  as  to  effect 
a  revocation  is  not  a  good  exercise  of  the  power,  and  void.* 

The  general  power  to  support  a  beneficiary  incapable  of 
acting  for  himself  is  also  in  a  large  measure  discretionary 
in  its  execution,  and  where  exercised  reasonabh*  will  not 
be  reviewed  by  the  court,'  although  in  some  jurisdictions 
the  court  claims  the  power  to  review  the  trustee's  action,* 
and  it  will  interfere  where  the  trustee  makes  no  payments 
at  all.« 

In  the  case  of  an  infant,  where  the  question  arises  as  to 
spending  an}*  part  of  the  principal,  it  is  more  prudent  to 
take  the  direction  of  the  court ;  as  although  it  ma}'  au- 
thorize an  expenditure  of  principal  it  is  said  that  it  will 
not  ratifj'  one ;  •  but  in  those  jurisdictions  where  the  courts 
give  the  trustee  a  large  discretion  it  would  probably  ratif}' 
au3'  expense  it  would  have  authorized.'' 

The  interest  of  the  beneficiary,  and  not  the  accumulation 
of  income  for  the  benefit  of  the  remainderman  is  the  chief 


^  Barker,  J.,  in  Lovett  v.  Farnham,  169  Mass.  1,  6. 
'^  Same  case,  and  ca.ses  cited. 

•  Bradlee  v.  Andrews.  137  Mass.  50;  Hills  v.  Putnam,  152  Mass. 
123;  Greene  v.  Smith,  17  R.  I.  28.  In  this  last  case  income  was  pay- 
able to  a  woman  "  for  her  rise  "  as  support,  and  the  court  held  that  the 
trustees  must  exercise  a  sound  discretion  in  paying  her  such  reasonable 
amounts  as  she  could  spend  for  that  purpose. 

•  Owens  V.  Walker,  2  Strob.  Eq.  289  ;  McKnight  v.  Walsh,  23  N.  J. 
Eq.  136. 

»  Collins  V.  Serverson,  2  Del.  Ch.  324 ;  Aldrich  v.  Aldrich,  12  R.  L  141 

•  Ga.  Code  (1895),  §3185. 

7  Williams  v.  Smith,  10  R.  I.  280,  283. 


68  A  tkustee's  handbook. 

consideration,'  and  the  trustee  may  provide  such  comforts 
and  luxuries  as  are  suitable  to  the  condition  in  life  of  the 
beneficiary,  and  he  is  capable  of  enjoying ;  as,  for  instance, 
making  a  home  for  his  father  or  mother ;  ^  keeping  a  horse  ;* 
or  providing  expensive  farm  buildings  or  gifts  to  charity 
where  the  fortune  is  ample.*  "Where  the  insane  life  tenant 
is  represented  by  a  guardian,  he  is  entitled  to  the  whole 
income,  not  merely  to  what  is  needed,  (a) 

If  there  are  more  beneficiaries  than  one  entitled  to  sup- 
port, the  question  whether  they  are  entitled  to  equal  support, 
or  whether  the  trustee  ma}-  apportion  among  them  accord- 
ing to  their  needs,  is  to  be  determined  by  the  intention  of 
the  maker  of  the  trust  as  gathered  from  the  instrument. 

If  the  income  is  settled  on  a  certain  class  of  persons,  or 
if  an  equal  division  of  propert}^  in  general  was  intended,^ 
the  amount  expended  must  be  equal. 

If  there  is  sufficient  income,  and  one  beneficiary  needs 
a  larger  expenditure  than  the  others,  the  trustee  should 
take  the  largest  amount  actuallv  expended  and  make  up 
to  those  whose  needs  are  not  so  great,  by  setting  aside  for 
those  individuals  a  sufficient  sum  to  bring  the  amount  dis- 
tributed to  them  up  to  the  largest  amount  expended,  and 
only  the  balance  will  be  added  to  principal. 

If,  however,  there  is  an  express  or  implied  intention  to 
give  the  trustee  the  power  to  expend  the  income  according 
to  the  needs  of  the  several  beneficiaries,  he  must  ascertain 
those  needs,  expend  accordingly,  and  accumulate  the  whole 
balance.^ 

Miscellaneous.  —  Besides  the  general  powers,  and  com- 
mon special  powers  above  treated,  trust  instruments  often 
contain  other  special  powers  too  numerous  to  treat,  es- 
pecially as  the  mode  of  execution  is  generally  carefully 

1  May  V.  May,  109  Mass.  252.       2  McKnight  v.  Walsh,  23  N.  J.  Eq.  136. 
8  Owens  V.  Walker,  2  Strob.  Eq.  289. 
*  Langton  v.  Brackenbury,  2  Colly.  446. 

8  Williams  v.  Bradley,  3  Allen,  270  ;  Jones  v.  Foote,  137  Mass.  543  ; 
Jackman  v.  Nelson,  147  Mass.  300;  Harte  v.  Tribe,  18  Beav.  215. 
6  In  re  Coleman,  39  Ch.  D.  443. 
(a)  Gasquet  i-.  Pollock,  1  App.  Div.  N.  Y.  512. 


THE  INDIVIDUAL  AS  TRUSTEE.  69 

provided  for  In'  the  instrument,  and  also  because  they  are 
governed  b}'  the  general  principles  set  forth  above. 

In  England  a  power  of  revocation  will  be  inserted  in  a 
voluntar}'  settlement,  and  its  absence  is  ground  to  set  it 
aside  ;  but  such  is  not  the  law  in  America,^  even  where  the 
special  motive  for  ci-eating  the  trust  has  disappeared.^  A 
power  of  drawing  the  principal  as  needed  for  support  will 
not  authorize  the  drawing  of  all  the  principal,  so  as  to 
effect  a  revocation  of  the  trust.^ 

Powers  to  appoint  a  successor  in  office  or  to  terminate 
the  trust  are  not  infrequent. 

IV.    DUTIES. 

As  we  have  alread}'  seen,  the  trustee  is  the  absolute 
owner  of  the  propert}',  except  in  so  far  as  his  ownership  is 
modified  by  his  duties  to  the  benficiaries.  These  duties 
are  not  limited  to  the  disposition  of  the  property  for  his 
benefit,  but  an  individual  in  assuming  the  character  of  a 
fiduciarj'  or  trustee  for  another  immediatel}'  enters  into  a 
status  with  respect  to  that  other  which  modifies  their  re- 
lationship as  individuals,  and  places  on  the  trustee  a  large 
number  of  duties  to  his  beneficiary  outside  of  and  beyond 
the  questions  affecting  the  trust  propert\'. 

His  duties  are  to  all  the  beneficiaries  coUectivel}',  and  he 
is  bound  to  treat  them  all  with  equal  justice. 

First,  we  will  treat  of  the  duties  which  a  trustee  owes 
his  beneficiary'  aside  from  the  management  of  the  property. 

Support.  —  If  the  beneficiar}'  is  under  a  disability,  it  is 
the  trustee's  dut}'  to  see  that  he  has  proper  care  and  sup- 
port. If  insane,  it  is  his  duty  to  have  him  declared  so  ;* 
and  if  incapable  for  any  reason  to  maintain  and  support 

1  Taylor  v.  Battrick,  165  Ma«8.  547 ;  Lawrence  v.  Lawrence,  181 
HI.'  248. 

*  Keyesr.  Carleton,  141  Mass.  45  ;  Brown  v.  Mercantile  Tmst  Co., 
87  M(l.  377.  See  contra.  Chestnut  Natl.  Bank  r.  Fidelity  Ins.  &  Tmst 
Co.,  186  Pa.  St.  333  (disapproved  in  preceding  case). 

•  Supra,  p.  67.        *  Nelson  v.  Duucombe,  9  Beav.  211.   Supra,  p.  63. 


70  A  trustee's  handbook. 

him  out  of  the  funds  which  be  would  otherwise  pay  over  to 
him,  and  accumuUite  any  balance  not  needed.  He  cannot 
use  funds  the  person  would  not  be  entitled  to  otherwise,^ 
and  an  act  of  the  legislature  authorizing  him  to  use  the 
principal  for  the  support  of  the  life  tenant  is  unconstitu- 
tional and  void.* 

The  support  is  to  be  taken  whollj^  from  income  except 
in  a  case  where  the  property  is  absolutely  vested  in  the 
beneficiary,  in  which  case  the  court  may  make  an  allow- 
ance from  principal ;  but  the  trustee  should  not  do  so 
without  an  order  from  the  court.* 

The  matter  of  support  is  often  complicated  bj'  the  fact 
that  others  maj'  have  a  duty  to  support  the  beneficiar}',  in 
which  case  the  trustee  is  excused. 

Thus,  if  the  parent  be  alive  and  able  to  furnish  support 
adequate  to  the  minor's  condition  and  fortune,  the  trustee 
should  not  contribute  except  under  order  of  court  ;*  if  the 
parent  cannot  furnish  sufficient  support,  the  trustee  should 
contribute  sufficient  to  make  reasonable  support,  taking 
all  sources  together,  and  if  there  are  two  funds  to  be  drawn 
from  the}'  should  be  taxed  ratably.  Where,  howevei-,  a 
fund  is  given  to  trustees  to  use  in  their  discretion  for  the 
support  of  an  insane  person,  they  ma}'  take  all  his  support 
from  that  fund  irrespective  of  his  other  means  ;^  and  if  the 
settlement  be  on  the  father  as  trustee  to  support  his  child, 
the  settlement  being  in  a  certain  sense  for  the  benefit  of 
the  father,  he  ma}'  take  the  whole  support  from  the  trust 
funds  irrespective  of  his  own  ability  ;  and  if  the  income  is 
to  be  paid  to  a  father  or  mother  for  the  support  of  a  child, 

^  Lee  V.  Brown,  4  Ves.  Jr.  362,  but  now  in  England  by  statute 
may  advance  support  to  an  infant  contingently  interested  (Re  George, 
5  C.  D.  837),  where  on  estate  becoming  vested  he  would  be  entitled  to 
the  accumulations. 

2  Ervine's  Appeal,  16  Pa.  St.  256. 

*  Supra,  p.  66.     In  re  Bostwick,  4  Johns.  Ch.  100. 

«  McKnight  v.  Walsh,  2a  N.  J.  Eq.  136;  Perry,  §  612;  Flint,  §  190; 
Lewin,  6.53 ;  Underbill,  350. 

B  Hills  V.  Putnam,  152  Mass.  123. 


THE  INDIVIDUAL  AS  TRUSTEE.  71 

they  are  entitled  to  it  so  long  as  they  support  the  child, 
but  the  court  will  see  that  they  do  so.* 

It  is  the  duty  of  a  father,  or  a  mother  not  under  cover- 
ture, (a)  to  support  a  minor  child  who  is  not  taken  from  his 
or  her  care  ;  but  a  stepfather  or  a  mother  under  coverture 
has  no  such  duty.*^    A  husband  must  support  his  wife. 

The  trustee  must  handle  the  funds  himself,  and  not 
delegate  the  management  of  the  funds  for  support  to  an- 
other, as  e.  g.  he  must  not  delegate  the  duty  to  the  father.' 

Under  the  existing  statute  law  married  women,  except 
in  their  relations  with  their  husbands,  generally  have  the 
same  status  as  other  individuals,*  and  the  trustee  has  no 
peculiar  duty  to  them  except  in  preventing  the  husband 
from  reducing  his  wife's  property  to  possession,  in  which 
case  he  should  protect  her  rights. 

Contracts  with  Beneficiary.  —  Where  the  beneficiary  is 
of  full  legal  capacity,  the  trustee  may  deal  with  and  make 
binding  contracts  with  him,  even  concerning  the  trust 
property.  He  cannot,  as  in  dealing  with  a  stranger,  take 
advantage  of  his  peculiar  knowledge  or  position  ;  but  if  he 
gains  any  advantage  in  the  transaction  he  will  be  under  the 
burden  of  showing  that  the  beneficiary  was  fully  informed 
and  thoroughly  understood  the  matter,  and  that  he,  the 
trustee,  has  taken  no  advantage  of  his  position  or  influence, 
or  the  transaction  may  be  disaffirmed.'  In  other  words, 
any  transaction  with  a  beneficiary  in  which  the  trustee 

1  Chase  i;.  Chase,  2  Allen,  101  ;  Loriiig  v.  Loring,  100  Mass.  340. 

2  Ailing  V.  Ailing,  27  Atl.  Kep.  655  ;  52  N.  J.  Eq.  92. 

«  Flint,  §  191  ;  but  Perry,  §  620,  says  he  may  exercise  sound  discre- 
tion in  paying  to  parent  or  guardian,  and  the  same  rule  applies  in  pay- 
ments to  the  beneficiary  himself.  See  Greene  v.  Smith,  17  R.  I.  28. 
Supra,  p.  67,  n.  3. 

*  Taylor  v.  Buttrick,  165  Mass.  547;  Jackson  v.  Von  Zedlitz,  136 
Mass.  342. 

6  Bowker  ».  Pierce,  130  Mass.  262 ;  Field  v.  Middlesex  Banking  Co., 
26  So.  Rep.  365  (Miss.  1899). 

(a)  Dedham  v.  Natick,  16  Mass.  135 ;  Oleasonv.  Boston,  144  Mass. 
25 ;  Wilkes  v.  Rogers,  6  Johns.  566 ;  Ailing  v.  Ailing,  52  N.  J.  Eq.  92 ; 
Underbill,  350  n. 


72  A  trustee's  handbook. 

receives  a  benefit  is  presumed  to  be  fraudulent,  and  the 
burden  of  proving  it  otlierwise  falls  on  bim.^ 

The  rule  is  the  same  whether  the  transaction  concerns 
the  trust  proper  or  property-  outside  of  the  trust. 

If,  for  instance,  a  trustee  sells  to  the  trust  fund  a  mort- 
gage for  more  than  the  property  is  worth,  and  afterwards 
induces  his  beneficiary,  relying  on  his  representations,  to 
allow  him  to  buy  in  the  property  on  foreclosure  to  pre- 
vent loss,  the  beneficiary  may  disaffirm  the  purchase  and 
require  the  trustee  to  take  the  property  and  refund  the 
mone}',  if  he  acts  as  soon  as  he  discovers  the  misrepre- 
sentations.^ 

The  trustee  may  accept  professional  employment  from 
the  beneficiary,  as  that  of  attorney,  broker,  or  counsel  in 
other  than  trust  matters,  but  if  he  takes  compensation 
must  show  that  he  has  not  used  his  position  to  obtain  the 
employment.' 

It  is  said  that  a  trustee  may  not  receive  a  gift  from  a 
beneficiar}',*  but  with  the  limitations  specified  as  to  other 
transactions,"  there  seems  to  be  no  reason  why  a  sponta- 
neous present,  especiallj'  if  of  small  value,  should  not  be 
given  and  accepted.  Still  such  transactions,  being  subject 
to  suspicion,  are  better  wholly  omitted. 

Good  Faith.  —  A  trustee  is  bound  to  exercise  the  utmost 
good  faith  in  all  the  concerns  of  the  trust,''  whether  it  be 
in  dealing  with  the  trust  propertj-  itself,  or  with  the  bene- 
ficiary in  matters  concerning  the  trust.  His  fealtj'  is  to 
the  trust,  and  all  his  acts  must  be  governed  b^-  strict 
loyalty  to  it  and  the  interests"  of  the  beneficiaries  ;  ®  and 

1  Cal.  Civ.  Code  (1885),  §  2235 ;  Dak.  Comp.  L.  (1887),  §  3928 ;  Rev. 
Code  N.  Dak.  (1895),  §  4271. 

2  Nichols,  Appellant,  157  Mass.  20. 

8  As  to  professional  employment  in  trust  matters,  see  supra,  p.  28. 
*  Vaughton  v.  Noble,  30  Beav.  34. 

8  Cal.  Civ.  Code  (1885),  §  2228;  Dak.  Comp.  L.  (1887),  §  3921. 
«  Perry,  §  434. 


TELE  INDIVIDUAL  AS  TEUSTEE.  73 

any  act  which  is  not  in  the  interest  of  the  beneficiaries  is 
a  breach  of  trust. 

Thus,  even  where  the  trustee  honestlj'  believes  that  the 
intention  of  the  maker  of  the  trust  was  otherwise,  he  must 
do  nothing  to  prejudice  the  interest  of  his  beneficiaries,^ 
and  in  a  suit  for  a  conveyance  he  cannot  set  up  a  superior 
title. ^  He  must  not  divulge  a  defect  in  the  title,  nor  admit 
the  adverse  claim  of  another,^  nor  deny  the  power  of  the 
settlor  to  create  the  trust,  (a)  or  set  up  an'  adverse  claim 
himself,  or  accept  an  adverse  employment.*  If  he  buys  an 
adverse  interest,  he  cannot  set  it  up  against  the  trust.®  If 
be  accidentally  acquire  an  adverse  interest  which  he  intends 
to  assert,  he  must  resign  the  trust,  unless  the  beneficiaries 
are  informed  and  consent  to  his  retention  of  the  office.® 

He  must  not  come  in  competition  with  the  trust  estate,' 
and  if  he  have  demands  both  as  an  individual  and  trustee  * 
against  the  same  person,  he  must  appropriate  an}'  sum  he 
collects  ratably'  between  the  two  claims.® 

His  Duty  is  All  to  the  Trust.  —  In  the  management  of 
the  fund,  the  trustee's  duty  is  wholly  to  his  trust ;  and  he 
must  do  all  that  can  be  honestl}'  done  for  the  furtherance 
of  its  interests. 

In  the  case  of  a  demand  be  must  press  it  by  suit,  unless 
it  is  evident  that  nothing  can  be  gained. 

In  defending  suits  he  should  take  all  good  ground  that 
he  has,  and  claim  all  exceptions.^" 

It  is  not  his  duty  to  appeal  from  an  adverse  decision, 

1  Ellis  V.  Barker.  L.  R.  7  Ch.  104 ;  Reid  v.  Mullins,  48  Mo.  344. 

2  Neyland  v.  Bendy,  69  Tex.  711. 

♦  Thomas  ».  Bowman,  30  111.  84. 

*  Benjamin  v.  Gill,  4.")  Ga.  110;  Civ.  Code  Cal.  (1885).  §  2230. 

«  M'Clanahan  v.  Henderson,  2  A.  K.  Marsh.  (Ky.)388;  12  Am. 
Dec.  412. 

•  Stone  V.  Godfrey,  5  DeG..  M.  &  G.  76.    '  Supra,  p.  28. 

»  Comp.  Laws  Dak.  (1887),  §  3925.  »  Scott».  Ray,  18Pick.360. 

w  Amer.  &  Eng.  Encyo.  Law.  vol.  27,  pp.  155-157. 
(a)  Sterling  v.  Sterling,  79  N.  W.  .')25  (Minn.  1899). 


74  A  trustee's  handbook. 

though  he  may  do  so  in  exercise  of  a  sound  discretion 
and  under  good  advice ;  but  if  a  decision  in  his  favor  is 
appealed  from,  he  must  maintain  tlie  suit/  and  he  should 
not  compromise  unless  it  is  clearly  for  the  benefit  of  the 
trust ;  ^  and  if  he  have  security,  he  must  not  release  it,  or 
part  of  it,  without  adequate  consideration.^ 

Trust  cannot  be  Delegated.  —  A  trust  is  a  personal 
confidence,  that  is  to  sa}-,  the  beneficiary  has  a  right  to 
compel  the  individual  who  is  trustee  to  perform  the  trusts 
himself.  The  trustee  cannot  turn  over  the  whole  trust  to 
another,  as  is  exemplified  in  the  case  of  Winthrop  v.  Attor- 
ney General,*  where  the  trustees  of  a  fund  for  the  support 
of  a  museum  at  Harvard  College  were  refused  leave  to 
turn  the  fund  over  to  the  general  fund  of  the  College,  the 
income  to  be  accounted  for  to  them.^  Nor  can  the  trustee 
delegate  any  part  of  his  duties  or  powers ;  his  duty  is  to 
exercise  the  powers  and  discretion  himself,®  and  if  he 
permits  another  to  act  in  his  place  he  does  so  at  his  peril.'' 
Thus,  where  two  trustees  divided  the  trust  and  each  man- 
aged a  half,  one  was  held  liable  for  the  half  lost  by  the 
other.*  But  where  the  duties  cannot  be  jointly  exercised 
they  may  make  a  reasonable  apportionment  of  them,  and 
neither  will  be  liable  for  the  loss  of  funds  or  neglect  of  the 
other.® 

In  practice,  it  is  usual  for  one  trustee  to  assume  the 
active  management  of  the  property,"  but  the  law  does  not 

1  Wood  V.  Burnham,  6  Paige,  513. 

2  Lewin,  p.  666. 

*  Supra,  pp.  64,  65,  as  to  condnct  of  suits. 

*  128  Mass.  258. 

^  See  also  Morville  v.  Fowle,  144  Mass.  109. 

8  Graham  k  King,  50  Mo.  22.     Supra,  p.  48. 

'  Bostock  V.  Floyer,  L.  R.  1  Eq.  26 ;  Jones's  Appeal,  8  Watts  &  S. 
143. 

*  Graham  v.  Austin,  2  Gratt.  273. 

9  State  V.  Guilford,  18  Ohio,  500;  Kilbee  v.  Sneyd,  2  Molloy,  186. 
10  Jones's  Appeal,  8  Watts  &  S.  143.    Infra,  p.  123. 


THE  INDIVIDUAL  AS  TRUSTEE.  75 

recognize  a  passive  trustee ;  ^  and  he  cannot  delegate  his 
powers,^  hence,  although  the  management  must  usually  be 
confided  to  a  certain  extent  to  one  trustee,  still  the  prop- 
ert}-  should  not  be  placed  in  his  exclusive  possession  and 
wholly  beyond  the  reasonable  control  of  all  the  trustees.* 
Each  trustee  must  exercise  at  least  a  general  supervision 
of  the  trust  affairs,  and  "  fulfil  the  purposes  of  the  trust 
with  ordinary  care  and  diligence  "  ;  *  and  a  managing  trus- 
tee stands  on  the  same  footing  as  any  other  agent,  except 
in  so  far  as  one  trustee  can  act  for  all,  as  in  collecting 
rents  or  dividends.^ 

As  noted  above  (p.  48),  the  trustees  may  prevent  one 
of  their  number  from  collecting  money  by  notifying  the 
debtor  to  pay  to  all  the  trustees  only ;  and  it  is  their  duty 
to  do  so,  if  they  know  their  co-trustee  to  be  unreliable  or 
likely  to  commit  a  breach  of  trust,  but  in  absence  of  such 
knowledge  they  are  justified  in  permitting  one  of  their 
number  to  exercise  his  powers,*  though  it  would  still  re- 
main their  duty  to  keep  a  general  oversight  of  his  doings, 
and  not  leave  funds  an  unreasonable  time  in  his  hands.'' 

A  distinction  should  be  drawn  between  income  and 
principal ;  it  being  customary,  and  probably  justifiable,  to 
allow  one  trustee  to  collect  and  disburse  the  former,  but 
not  the  latter ;  and  a  trustee  who  allowed  his  co-trustee  to 
collect  a  large  amount  of  principal  and  let  it  lie  uninvested 
in  his  hands,  would  be  held  liable  for  its  loss.* 

It  is  not  a  delegation  of  the  trust  to  permit  the  managing 
trustee  or  an  agent  to  perform  an}'  ministerial  acts  not  re- 
quiring the  exercise  of  discretion  or  judgment.*     Thus  the 

1  Clark  V.  Clark,  8  Paige,  153.  «  Supra,  p.  48. 

»  Evans's  Estate,  2  Ashmcail,  470.     Infra,  p.  123. 
«  Comp.  Laws  Dak.  (1887),  §  3941 ;  Rev.  Code  N.  D.  (1895),  §  4284? 
Code  Ga.  (1895),  §  3170;  Code  Cal.  (1885),  §§  2258,  2259. 
'  Supra,  p.  48. 

«  State  V.  Guilford,  18  Ohio,  500. 
'  Jones's  Appeal,  8  Watts  &  S.  143.     Infra,  p.  124. 
•  Infra,  p.  124. 
»  Terry,  §  409.     Supra,  p  49. 


76  A  trustee's  handbook. 

managing  trustee  or  an  agent  may  be  allowed  to  collect 
dividends  and  rents,  and  keep  the  books,  and  in  general  act 
for  the  trustees  wherever  there  is  a  moral  or  legal  neces- 
sity to  emplo}'  an  agent.^  Such  a  necessity  exists  where  the 
ordinarily  prudent  man  of  business  would  employ  an  agent 
in  his  own  affairs,  as,  fo,r  example,  employing  a  stock- 
broker to  purchase  stocks,  and  paying  for  them  through 
him.'^  In  such  cases  the  trustee  will  not  be  liable  for  the 
default  of  the  agent,  but  only  for  his  care  in  selecting  him  ;  * 
as  again,  for  instance,  a  trustee  who  has  employed  a  good 
conve3-ancer  is  not  responsible  for  a  flaw  in  the  title  which 
he  overlooked.* 

The  employment  of  one  of  the  trustees  or  an  agent  in 
such  cases  is  not  a  delegation  of  the  trust,  but  is  the  law- 
ful act  of  the  trustees  b\'  the  hand  of  another.  The  differ- 
ence between  a  delegation  of  the  trust  itself  and  the 
performance  of  a  ministerial  act  by  an  attorney  ma}'  be 
illustrated  in  the  case  of  a  sale  of  land. 

The  trustees  could  not  delegate  the  matter  of  making 
the  sale  —  that  is,  determining  the  price,  terms,  and 
whether  it  was  better  or  not  to  sell  or  adjourn  the  sale  — 
to  one  of  the  trustees,^  but  they  might  authorize  one  of  the 
trustees  to  execute  and  deliver  the  deed  for  them,  after 
they  had  determined  the  matter  of  the  sale. 

Again,  the  trustees  could  not  give  an  agent  or  one  of 
their  number  a  general  power  of  attornej'  to  sell  stocks ; 
but  they  might  give  a  special  power  to  transfer  a  particu- 
lar stock.  In  the  first  instance  the  trustees  are  delegating 
their  power  to  sell,  which  is  a  delegation  of  the  trust ;  in 
the  latter  case  they  are  employing  an  agent  to  make  a 
transfer,  which  is  a  purel}'  ministerial  act.*' 

1  Ex  parte  Belchier,  Amb.  219. 

2  Speight  I'.  Gaunt,  22  Ch.  D.  727. 

8  Lewin,  267,  n. ;  Speight  v.  Gaunt,  22  Ch.  D.  727 ;  Ex  parte  Belchier, 
Amb.  219. 

*  Contra,  Hopgood  v.  Parkin,  11  Eq.  74.  But  see  criticism  on  this 
case.  Underbill,  p.  300,  §  8. 

*  Graham  v.  King,  50  Mo.  22.    Supra,  p.  57.  «  Supra,  p.  49. 


THE  INDIVIDTJAL  AS   TRUSTEE.  77 

Accounts. — If  the  trust  is  a  testamentary  one,  the 
trustee  will  be  required  to  file  an  inventory  (by  statute  in 
practicall}'  all  the  States)  soon  after  his  appointment. 

A  trustee  must  keep  accurate  and  separate  accounts  of 
the  trust,  which  should  be  always  open  to  the  inspection 
of  the  beneficiary,  even  if  kept  in  a  book  with  other  ac- 
counts.^ If  the  account  is  inaccurate  or  obscure,  the 
trustee  is  the  loser,  since  everything  will  be  taken  against 
him.^ 

A  court  of  equity  may  compel  anj'  trustee  to  account,' 
but  as  a  general  rule  the  jurisdiction  is  given  to  probate 
courts  by  statute. 

A  testamentary  trustee  is  entitled  to  a  periodical  settle- 
ment of  accounts  with  his  beneficiaries,  and  to  a  formal 
discharge  or  settlement  in  court,  but  he  is  not  entitled  to 
a  release  under  seal.* 

In  England,  under  the  trustee's  relief  act,  an}'  trustee 
can  account  and  pay  money  into  court ;  ^  but  in  the  ab- 
sence of  statute  in  America  there  seems  to  be  no  general 
jurisdiction  in  the  court  to  compel  the  beneficiary  to  come 
in  and  settle  his  account. 

All  the  trustees  must  join,  and  if  one  trustee  allows 
another  to  render  a  fraudulent  account,  he  is  liable  as  a 
party  to  it.' 

If  the  trustee  holds  by  appointment  of  the  court,  he  will 
be  required  to  settle  his  account  in  court  at  stated  inter- 
vals.'' In  such  cases  he  need  not  render  any  other  account, 
and  the  beneficiary  must  come  into  court  to  settle. 

If  the  trustee  does  not  hold  under  appointment  of  court, 

*  Hopkinson  v.  Bnrghley,  L.  R.  2  Ch.  447. 

2  Landis  v.  Scott,  32  Pa.  St.  495  ;  Blauvelt  r.  Ackermann,  23  N.  J. 
Eq.  49.5. 

«  Weaver  ».  Fisher,  110  Dl.  146;  Mass.  Pub.  Stat.  (1882),  ch.  144, 
§  15,  and  passim. 

*  King  V.  Mullins,  1  Drew.  308.     Infra,  p.  119. 
»  In  re  Wright's  Trusts,  3  K.  &  J.  419,  421. 

*  Infra,  p.  124. 

^  Provided  for  by  statute  in  most  States. 


78  A  trustee's  handbook. 

he  should  settle  his  accounts  j'early,  or  as  often  as  the 
settlement  requires. 

If  a  trustee  dies,  the  survivors  will  settle  the  account ; 
and  if  a  sole  trustee  dies,  his  executor  or  administrator 
may  do  so,  although  he  does  not  succeed  him  in  the  trust.^ 

Form  of  Account.  —  The  trustee's  account  is  intended 
to  show  the  condition  of  the  estate,  and  docs  not  involve 
the  trustee's  personal  account  with  the  remainderman  or 
with  other  trusts.'^ 

The  account  must  show  ever}'  transaction  in  detail,  and 
include  a  list  of  propert}-  in  the  hands  of  the  trustee.  He 
must  charge  himself  with  each  item  received,  and  credit 
himself  with  ever}-  item  lost,  expended,  or  paid  out,  and 
ask  to  be  allowed  for  the  same.  In  accounting  to  a  court 
he  need  not  include  in  his  account  real  estate,  or  the  rents 
from  real  estate  which  lies  in  another  jurisdiction,*  but  only 
the  surplus  brought  into  the  jurisdiction  of  the  court.* 

The  court  in  which  the  account  is  settled  will  prescribe 
the  form  in  which  the  account  will  be  made  ;  but  in  every 
trust  account  there  should  be  at  least  six  schedules,  viz. : 
income  received,  income  paid,  additions  to  principal^  de- 
ductions from  principal,  principal  on  hand,  and  changes  in 
investments  consisting  of  debtor  and  creditor  sides. 

The  income  received  should  contain  all  the  sums  to 
which  the  life  beneficiar}'  is  entitled,  and  the  income  paid 
all  the  charges  against  him. 

The  changes  in  investment  should  contain  on  the  debtor 
side  all  the  amounts  received  as  principal  for  the  remain- 
derman, beginning  with  any  balance  of  cash  on  hand ; 
and  on  the  credit  side,  all  the  amounts  paid  out  as  prin- 
cipal ;  and  these  two  accounts  should  balance. 

If  there  has  been  an}'  gain  to  the  principal,  as  by  income 

1  Munroe  v.  Holmes,  13  Allen,  109. 

2  Dodd  V.  Winship,  133  Mass.  359. 

*  Morrill  v.  Morrill,  1  Allen,  132. 

*  Clarke  v.  Blackington,  110  Mass.  369.    Lifra,  p.  157. 


THE  INDIVIDUAIi  AS  TRUSTEE.  79 

added,  or  sale  of  a  securitj'  above  its  cost,  or  the  recovery  of 
an  amount  not  shown  in  the  inventor}'  or  previous  accounts, 
it  should  appear  in  the  schedule  of  additions  to  principal. 

The  schedule  of  deductions  from  principal  will  be  made 
of  similar  items  of  loss  and  of  any  charges  against  the 
remainderman. 

The  schedule  of  principal  on  hand  should  enumerate 
each  item  of  the  trust  propert}-  with  its  cost,  either  actual 
or  appraised,  carried  out ;  and  the  schedule  of  the  current 
j'ear  will  alwa}^  equal  that  of  the  previous  year,  after  add- 
ing the  schedule  of  additions  and  deducting  the  schedule 
of  deductions. 

The  form  of  account  above  given  is  that  used  in  the 
courts  of  many  States,  but  in  some  States  the  schedules  of 
changes  and  additions  and  deductions  are  not  put  in,  but  all 
amounts  received  as  principal  are  charged,  and  all  amounts 
paid  out  of  principal  are  credited,  and  the  difference  in 
amount  between  these  two  schedules  will  be  the  difference 
between  the  schedule  of  the  current  and  preceding  3'ear. 

EflFect  of  an  Account.  —  An  account  settled  in  the 
probate  court  is  final,i  as  to  all  questions  hoard  and  de- 
termined between  the  parties  ;  '^  it  cannot  be  reopened  ex- 
cept to  correct  a  mistake '  or  fraud,  and  its  correctness 
cannot  be  questioned  in  a  collateral  proceeding  in  equitj-  * 
or  in  a  court  of  law.* 

The  account  has  no  effect  on  the  rights  of  a  person  not 
party  to  the  proceedings,  and  a  minor  or  a  person  unborn 
or  a  person  unascertained  must  be  represented  by  a  guar- 
dian ad  litem  in  order  to  be  concluded.® 

*  Stetson  V.  Bass,  9  Pick.  26, 29 ;  Mass.  Pnb.  Stat.  (1882),  ch.  144,  §  9, 

*  Foster  v.  Foster,  134  Masa.  120. 

8  Dodd  V.  Winship,  144  Ma>«8.  461. 

*  Sever  v.  Russell,  4  Cu.^h.  513. 

»  Tarcher  v.  Bnasell,  11  Cush.  107. 

*  Morse  v.  Hill.  136  Mass.  60,  67;  Jenkins  v.  Whyte,  62  Md.  427. 
The  acqniescence  of  a  p^ardian  ad  litem  does  not  preclude  his  ward. 
Dcnholm  v.  McKay,  148  Mass.  434. 


80  A  trustee's  handbook. 

In  man}'  States  there  are  statutes  providing  for  notice  to 
such  persons,  and  for  the  appointment  of  guardians. 

A  successor  in  a  trust  is  not  accountable  for  the  faults 
of  his  predecessor,  yet  as  the  state  of  the  funds  may  be 
affected  b}'  his  act,  the  successor's  duty  may  require  him 
to  investigate  his  predecessor's  acts,  reopen  his  accounts, 
and  recover  from  him  or  his  estate.^ 

An  account  simply  allowed  by  the  court  without  making 
all  persons  interested  parties,  may  be  reopened  by  the 
court  in  its  discretion,  even  after  so  long  a  period  as 
twelve  years,  to  correct  a  mistake  or  fraud,  but  not  on  the 
ground  that  the  former  determination  was  erroneous ;  '^  but 
if  the  beneficiary  had  an  estate  in  possession  and  has  as- 
sented to  the  account,'  or  has  neglected  for  a  long  period 
to  enforce  his  rights,  the  court  will  not  help  him,  although 
there  is  no  statute  of  limitations  to  bar  him.* 

If  the  account  is  not  settled  in  court,  the  settlement  is 
final  in  so  far  as  the  account  is  assented  to  b}'  persons 
interested  and  able  to  act  for  themselves,  and  may  be  re- 
opened even  by  them  to  correct  mistakes  of  fraud, ^  but  in 
so  far  as  fairly  made  is  binding  on  all  who  take  part  in  it 
even  though  it  cover  a  breach  of  trust.* 

The  Expense  of  Accounting.  —  It  is  the  trustee's  duty 
to  make  up  an  account ;  therefore  ordinary  compensation 
covers  the  making  up  of  the  account,  but  any  court  charges 
will  be  borne  by  the  trust  estate,  unless  the  trustee  was  at 
fault  in  not  accounting,  in  which  case  he  raaj"^  be  ordered 
by  the  court  to  pay  the  costs.' 

1  Blake  v.  Pegram,  109  Mass.  541 ;  Ex  parte  Geaves,  8  DeQ.,  M.  & 
G.  291. 

2  Cummings  »•.  Cumming.*,  128  Mass.  532. 
"  Amory  v.  Lowell,  104  Mass.  265. 

*  Tnfra,  p.  149. 

6  Ba.ssett  v.  Granger,  140  Mass.  183. 

*  Infra,  p.  148 ;  Amory  v.  Lowell,  nht  supra. 

'  Blake  v.  Pegram,  109  Mass.  541.  558.  Tn  Enffland,  and  where  the 
trnstee  acts  without  compensation,  the  fund  would  bear  the  expense  of 


THE   INDIVIDUAL  AS  TRUSTEE.  81 

Where  the  Trustee  is  in  Doubt  as  to  his  Duty.  —  When 
a  trusteie  is  in  doubt  as  to  his  dut}-,  he  may  notify  the  ben- 
eficiary of  his  intended  action,  and  if  he  does  not  object 
he  will  not  be  heard  to  do  so  at  a  later  date  ;  ^  and  where  the 
beneficiaries  are  of  full  capacity,  although  there  is  no  obli- 
gation on  him  to  do  so,  j'et  it  is  undoubtedly  a  prudent  plan 
for  the  trustee  to  consult  his  beneficiaries  before  taking  an}' 
important  step,^  but  generally  this  mode  of  procedure  will 
onl}'  protect  the  trustee  against  the  life  beneficiaries,  and 
so  is  incomplete.  If  therefore  there  is  a  doubt  as  to  what 
the  trustee's  duties  are,  he  can  and  should  apply  to  the  court 
for  instructions ;  ^  but  he  cannot  consult  the  court  simply 
because  he  is  ignorant  and  does  not  know  his  duty  or  what 
the  law  is.  In  such  case,  the  court  may  tell  him  to  take 
advice,*  and  if  he  involves  the  estate  in  unnecessary  litiga- 
tion he  ma}'  have  to  pay  costs.  But  where  a  question 
arises  as  to  the  proper  construction  of  the  settlement,  or  a 
determination  between  conflicting  claims  ^  is  necessary,  he 
may  refer  the  matter  to  the  court  and  will  be  protected  by 
its  determination.  He  may  ask  its  instructions  as  to  a 
compromise,'  sale  or  investment  of  the  trust  property,'  or 
on  such  a  question  as  the  apportionment  of  a  fund  be- 
tween the  life  tenant  and  remainderman,  as,  for  instance,  a 
Btock  dividend  or  the  apportionment  of  the  expense  of  cer- 
tain repairs. 

"Where,  however,  he  is  given  a  discretionary  power  in 
the  matter,  the  court  will  not  interfere  since  he  is  the 

acconntin^,  bnt  the  expense  of  fnrnishing  an  nnnecessary  account  must 
be  borne  bv  the  person  requiring  it.     T?e  Bosworth,  58  L.  J.  Ch.  432. 

1  Life  Association  of  Scotland  v.  Siddal,  3  DeG.,  F.  &  J.  58,  74. 

2  Bradbv  t>.  Whitchurch,  W.  N.  1868,  p.  81. 

8  Generally,  hut  by  statnte  sometimeB.  Hex.  Stat.  Ohio  (1890), 
§  6202;  Pub.Stat.  N."  H.  (1891),  ch.  198,  §  10. 

*  Greene  v.  Mnmford,  4  R.  I.  313;  Underbill,  436,  n. 

*  Hills  V.  Putnam,  152  Mass.  124. 

«  Mass.  Pub.  Stat.  (1882),  ch.  142,  §  12;  Chadbourn  v.  Chadboum, 
9  Allen.  173. 

">  Wheeler  v.  Perry,  18  N,  H.  307. 
6 


82  A  TRUSTEE'S  HANDBOOK. 

forum  and  not  it.*  Nor  could  he  use  this  method  of  de- 
termining a  question  at  law,  as,  for  instance,  what  is  his 
liability  to  a  creditor  or  for  a  tax  ;  ^  or  what  his  powers  and 
duties  will  be  under  a  contemplated  reorganization  of  a 
corporation ;  ^  nor  if  he  contract  under  order  of  court  will 
he  be  protected  from  personal  liability,  but  will  be  only 
assured  of  indemnity  from  the  trust  fund,  ((t) 

No  application  will  be  considered  until  the  question  is  a 
practical  one  and  must  be  decided.  Hence  a  question  as 
to  who  will  be  entitled  in  remainder  cannot  be  asked  dur- 
ing the  existence  of  the  life  estate.* 

The  proper  way  to  raise  the  question  is  by  a  bill  for  in- 
structions, and  not  by  a  fictitious  account.®  An  account 
is  meant  to  show  the  state  of  the  estate,  and  is  not  for  the 
trial  of  disputed  claims.®  All  persons  interested  should  be 
made  parties ;  (&)  but  when  they  are  very  numerous  and 
every  possible  interest  is  adequately  represented,  the  court 
may  proceed  with  less,  (c)  If  the  suit  is  in  the  probate  court 
it  will  be  conclusive  irrespective  of  the  parties  joined,  (d) 

V.    MANAGEMENT  OF   FUND. 

What  may  be  Trust  Property.  —  Any  sort  of  property, 
real  or  personal,  in  possession  or  reversion,  or  any  inter- 
est, whether  vested  or  contingent,  which  can  be  assigned, 
may  be  the  subject  of  a  trust,''  even  though  it  be  real  estate 
outside  of  the  jurisdiction  of  the  court, ^  or  something  not 
actually  in  existence,^  or  trade  secret  or  patent  right,  but 
trusts  only  extend  to  property,  and  not  to  such  things  as 
the  performance  of  an  act,  as  the  employment  of  a  par- 
ticular person  as  attorney  or  agent. ^° 

Taking  Possession.  —  On  accepting  a  trust,  it  is  the 
trustee's  duty  to  inquire  into  the  nature  of  the  property 

1  Trust  Co.  J).  Sheldon,  59  Vt.  374.       ^  Greene  v.  Mumford,  4  R.  I.  313. 

8  Treadwell  v.  Salisbury  Mfg.  Co.,  7  Gray,  393. 
*  BuUard  l:  Chandler,  149  Mass.  .532. 

6  Lincoln  v.  Aldrich,  141  Mass.  342. 

6  Dodd  V.  Winship,  133  Ma.ss.  359 ;  New  Eng.  Trust  Co.  v.  Eaton,  140 
Ma.ss.  532.       "^  Perry,  §§  67,  68.      «  Massie  v.  Watts,  6  Cranch,  148, 1 60. 

9  Mitchell  u.  Winslow,  2  Story,  630.     lo  Foster  i;.Elsley,l  9  Ch.  Div.  51  a 
(a)  Infra,  p.  120.  {b)  Waguon  v.  Pease,  104  Ga.  417. 

(c)  Hills  V.  Barnard,  152  Mass.  67.  (d)  Infra,  p.  118. 


THE  INDIVIDUAL  AS  TRUSTEE.  83 

and  trust  documents.^  If  he  succeeds  a  former  trustee,  he 
must  ascertain  that  he  receives  all  the  property  that  belongs 
to  the  estate,  which  will  involve  the  examination  of  his  pre- 
decessor's accounts  so  far  as  thej*  are  open.^ 

He  is  not  bound  to  take  the  securities  tendered  him  if 
they  are  improper  investments,  but  may  insist  on  having 
them  converted  into  cash,  or,  at  any  rate,  he  need  only 
take  the  securities  at  their  actual  value  and  then  should 
collect  the  balance  from  the  outgoing  trustee.*  If  he  takes 
the  securities  at  their  inventory  value,  he  will  be  responsiijle 
for  them  at  that  price. 

The  same  rule  applies  where  he  takes  the  estate  from  an 
executor.  He  must  take  immediate  steps  to  secure  the 
trust  property  and  properly  invest  it.  He  will  have  an 
equitable  action  against  a  transferee  of  the  legal  title  made 
before  he  became  trustee.* 

Jieal  Estate.  —  If  the  appointment  is  an  original  one, 
the  will  or  settlement  will  vest  the  title  of  the  real  estate 
in  the  trustee,  and  he  must  see  that  the  instrument  is 
recorded  in  every  jurisdiction  where  there  is  any  land.' 

If  the  trustee  comes  in  the  place  of  a  former  trustee,  the 
estate  may  vest  in  him  by  the  terms  of  the  trust  instrument 
or  by  statute,  in  which  case  he  must  see  that  he  is  duly 
appointed  or  his  appointment  recorded  in  each  jurisdiction 
where  the  land  lies,"  or  if  there  is  no  provision  in  the  in- 
strument, and  he  is  not  appointed  b}-  a  decree  of  court 
vesting  the  property  in  him,  then  he  must  take  a  convey- 
ance and  record  it  in  each  jurisdiction. 

Having  acquired  title  he  should  at  once  take  possession, 
actual  or  constructive.     If  the  real  estate  is  let  he  should 

1  Hallows  V.  Lloyd,  39  Ch.  Div.  686,  691 ;  Underbill,  p.  219. 

«  Supra,  p.  80.     Ex  parte  Geaves,  8  DeG.,  M.  &  G.  291. 

»  In  Re  Salmon,  42  Ch.  Div.  351  ;  Thayer  v.  Kiusey,  162  Mass.  232 

*  Loring  v.  Salisbury  Mills,  12.5  Mass.  138. 
^  Hext  V.  Porcher,  1  Strobb.  Eq.  170. 

•  Cogbill  V.  Boyd,  77  Va.  450. 


84  A  trustee's  handbook. 

take  constructive  possession  by  compelling  the  tenant  to 
attorn,  or  acknowledge  him  as  his  landlord  and  agree  to 
pay  rent  to  him,  or  if  there  is  no  tenant  he  should  take 
actual  possession  of  the  land. 

If  the  beneficiary  is  in  possession  under  the  terms  of 
the  trust  he  need  do  nothing,  as  the  beneficiary's  posses- 
sion is  constructively  the  possession  of  the  trustee. 

JPersonal  Property.  —  If  the  trustee  is  an  original  ap- 
pointee under  a  deed,  the  personal  property  will  probably 
be  in  the  hands  of  the  settlor,  and  it,  or  the  evidences  of 
it,  should  be  delivered  to  the  trustee  when  the  settlement 
is  made. 

If  the  trustee  joins  in  a  deed  acknowledging  the  receipt 
of  the  property,  and  does  not  as  a  matter  of  fact  receive 
it,  he  will  be  liable  for  it  as  though  he  had  received  it,  to 
any  person  acting  on  the  faith  of  his  receipt.^ 

If  the  trustee  is  appointed  under  a  will,^  he  may  not  be 
entitled  to  the  personal  property  at  once,  as  until  the 
executors  have  administered  the  estate  they  are  entitled 
to  hold  it ;  and  where  the  same  persons  are  trustees  and 
executors,  until  they  terminate  the  executorship  by  filing 
an  account  crediting  themselves  as  executors  with  the  trust 
property,  and  qualify  as  trustees  or  do  some  other  definite 
act  showing  a  transfer,  they  will  still  remain  liable  as  exec- 
utors and  will  not  hold  as  trustees.^  "  When  a  trust  fund 
is  to  be  created  by  an  executor  out  of  the  assets  of  an  estate, 
something  more  must  be  done  by  the  executor  in  order  to 
impress  the  trust  on  particular  propert}'  than  to  hold  the 
property  with  the  intention  that  it  shall  constitute  the  trust 
fund.  There  must  be  some  act  of  appropriation  which 
transfers  it  to  the  trust  fund  and  gives  the  beneficiaries 
right  to  have  it  held  for  them."  * 

1  Low  V.  Bouverie,  3  Ch.  D.  [1891]  82.     See  infra,  p.  120, 

2  See  supra,  p.  9. 

«  Crocker  v.  Dillon,  133  Mass.  91.     Supra,  p.  12. 

♦  Knowlton,  J.,  in  Sheffield  v.  Parker,  158  Mass.  330,  332, 


THE  INDIVTDUAL  AS  TRUSTEE.  85 

In  the  case  of  an  incoming  trustee  it  is  his  duty  to  ex- 
amine the  executor's  accounts  and  ascertain  that  he  ob- 
tains all  the  estate  that  he  is  entitled  to.^ 

Although  the  provisions  of  the  trust  instrument  or  decree 
of  the  court  maj-  have  the  force  of  a  written  transfer,  yet 
in  the  case  of  personal  property  a  delivery  of  the  property 
itself  or  of  the  evidence  of  it  is  essential,  and  in  everj'  case 
it  is  desirable  where  the  property  is  such  as  not  to  pass 
b\'  delivery  simplj-,  to  have  a  written  transfer  from  the 
former  owner.  But  where  the  property  is  vested  in  the 
new  trustee  by  force  of  statute  or  provision  of  the  trust 
instrument,  he,  and  not  the  former  owner,  is  the  proper 
person  to  transfer.  Where  there  is  no  decree  of  the  court, 
or  no  provision  of  the  trust  instrument  vesting  title,  an 
assignment  bj-  the  holder  of  the  title  is  indispensable. 

Registered  bonds,  notes,  and  certificates  of  stock  should 
stand  in  the  names  of  all  the  trustees,  and  should  specify 
the  trust  under  which  the}'  are  held  on  their  face,  so  that 
there  can  be  no  question  as  to  its  identity.  To  describe 
the  holders  as  "  trustees  "  merely  is  not  suflScient,  as  it  is 
not  apparent  to  what  fund  the  stock  belongs,  and  no  well 
advised  purchaser  will  take  a  transfer  of  such  a  stock 
without  farther  assurance. 

The  transfer  should  be  made  without  dela}' :  on  a  note 
by  indorsement,  and  on  a  stock  or  registered  bond  by 
indorsement  and  transfer  on  the  books  of  the  companj-. 

If  there  is  a  chose  in  action  or  equity,  the  obligor  should 
be  notified  at  once  ;  ^  as  for  instance  a  bank  account,  for 
although  notice  is  not  necessary  to  complete  the  title  in 
some  jurisdictions,'  a  payment  of  tlie  claim  or  other  nova- 
tion of  the  security  to  the  previous  holder  before  notice 
will  discharge  the  debtor.* 

All  claims  which  are  due  should  be  called  in,  unless 
they  are  such  as  to  constitute  a  proper  trust  investment ; 
and  if  necessary  the  trustee  should  sue  without  delay,  un- 

1  Infra,  p.  122.  «  Ames,  327,  n. 

•  Thayer  v.  DanielB,  113  Mass.  129.  *  Infra,  p.  134. 


86  A  trustee's  handbook. 

.ess  he  can  show  that  more  is  to  be  gained  by  forbear- 
ance,^ not  only  for  these,  but  for  any  of  the  trust  property 
which  he  cannot  obtain  on  demand,  and  he  will  have  an 
equitable  suit  for  property,  of  which  the  legal  title  has 
passed  to  a  third  person  by  a  breach  of  his  predecessor  in 
the  ti-ust.^ 

Care  and  Custody  of  the  Trust  Property.  — Assuming 
that  the  trustees  have  got  titles,  and  the  propert}'  properly 
into  their  hands,  their  next  duty  is  to  take  proper  care 
of  it. 

Meal  Estate.  —  The  trustee  should  immediately  insure 
the  real  estate  for  a  reasonable  amount,  should  fence  it  if 
uecessarj^,  and  put  it  in  a  condition  to  be  let,  and  there- 
after he  must  keep  the  property  insured,'  fenced,  and  in 
repair,  and  pa}-  the  taxes  on  it. 

If  the  property  is  unimproved  he  may  improve  it  so  as 
to  secure  a  tenant,  but,  in  the  absence  of  special  power 
from  the  trust  instrument  or  court  to  do  so,  he  must  be 
careful  not  to  convert  the  personal  property  of  the  estate 
from  pei'sonal  to  real  estate  without  authority  in  doing 
so,  as  by  spending  any  cash  that  may  be  on  hand  or 
the  proceeds  of  the  sale  of  securities. 

Personal  Property.  — Trust  chattels  are  usualh'  meant 
to  be  enjoj'ed  in  specie  by  the  beneficiar}-,  and  may  be 
turned  over  to  him,  and  if  he  uses  them  up,  lets,  or  de- 

^  Ames,  494,  n.  1. 

2  Loring  v.  Salisbury  Mills,  125  Mass.  138. 

2  Burr  V.  McEwen,  Baldw.  C.  C.  154,  and  Eng.  &  Am.  Encyc.  of 
Law,  vol.  27,  p.  163,  which  states  that  the  trustee  must  insure,  al- 
though unsupported  by  the  cases  cited.  But  Davis,  J.,  in  Insurance  Co. 
V.  Chase,  5  Wall.  509,  514,  and  the  cases  in  general  and  the  English 
statute,  Lewin,  p.  314,  and  Perry,  §  487,  all  say  that  a  trustee  man  ^^' 
sure ;  but  under  raodern  conditions,  where  every  prudent  man  does 
insure  his  own  risks,  it  would  seem  that  a  trustee  mu.st  insure,  and  he 
is  usually  required  to  do  so  by  well  drawn  trust  instruments. 


THE  INDIVIDUAL  AS  TRUSTEE.  87 

stroj-s  them,  the  trustee  will  not  be  liable  ;  but  the  trustee 
should  require  him  to  siga  an  inventory  when  they  are 
delivered. 

Where  the  use  of  the  chattels  is  not  given  to  the  bene- 
ficiary, they  should  be  converted  into  money,^  unless  they 
were  to  be  held  unconverted,  in  which  case  the  trustee 
must  keep  the  actual  possession,  and  as  several  persons 
cannot  conveniently  hold  them  they  may  be  left  in  the 
hands  of  one  trustee. 

Money  should  be  deposited  in  a  good  bank  in  the  joint 
names  of  all  the  trustees ;  and  if  it  is  deposited  in  the  in- 
dividual names,  the  trustees  will  be  liable  if  it  is  lost, 
though  without  their  fault,  as  b}"  a  failure  of  the  bank  or 
otherwise.* 

All  the  trustees  are  responsible  if  the^'  leave  monej'  for 
more  than  temporar3'  purpose  in  the  name  of  one.*  And 
while  it  is  customary  and  probably  justifiable  to  permit 
one  trustee  to  draw  checks  alone  against  an  account 
which  consists  wholly  of  income,  they  should  not  permit 
large  amounts  of  principal  to  lie  in  the  bank  subject  to  the 
draft  of  one  of  their  number.* 

But  one  trustee  may  be  allowed  to  draw  checks  against 
income,  since  it  is  not  unreasonable  to  allow  one  trustee 
to  collect  it.' 

It  was  held  in  a  case  where  there  was  a  dispute,  and 
consequently  the  funds  could  not  be  invested,''  that  the 
trustees  were  entitled  each  to  hold  half  and  pay  interest 

1  Dorr  V.  Wainwright,  13  Pick.  828 ;  McDonald  r.  Irvine,  8  C.  D. 
101,  112. 

2  As  to  when  a  conversion  is  proper,  see  'mfra,  p.  89. 

8  In  re  Argnello,  97  Cal.  196;  Ames,  484,  n. ;  Corya  v.  Corya,  119 
Ind.  593;  Civ.  Code  Cal.  (1885),  §  2236;  Comp.  Laws  Dak.  (1887), 
§  3929 ;  Rev.  Code  N.  Dak.  (1895),  §  4272. 

*  Monell  p.  Monell,  5  Johns.  Ch.  2a3 ;  9  Amer.  Dec.  298. 

»  Lewis  V.  Nobbs,  L.  R.  8  Ch.  D.  591 ;  Clough  i-.  Dixon,  8  Sim. 
594. 

«  Kilbee  v.  Sneyd,  2  Moll.  186.     Supra,  p.  48. 

^  Ames  V.  Scndder,  II  Mo.  App.  168. 


88  A  trustee's  handbook. 

thereon,  and  one  becoming  insolvent  the  other  was  not 
held  liable,  but  it  is  somewhat  doubtful  whether  this  rule 
can  be  safely  followed  ;  it  would  seem  more  appropriate  to 
deposit  the  money  in  a  safe  place  in  the  joint  names. 

Non- negotiable  stocks,  registered  bonds,  notes,  deeds, 
&c.,  may  be  left  in  the  custody  of  one  trustee,^  or  in  case 
of  necessity  or  propriety  in  the  hands  of  an  agent ;  ^  as  for 
instance  deeds  could  be  left  with  a  solicitor,  or  stocks  witli 
a  stockbroker  who  is  negotiating  a  sale ;  but  if  negotiable 
securities  be  left  in  the  hands  of  an  agent  unnecessarily 
the  trustees  would  undoubtedly  be  liable.® 

Negotiable  securities,  and  partially  negotiable  securi- 
ties such  as  registered  coupon  bonds,  should  be  deposited 
in  a  safe  deposit  vault,  or  where  none  is  convenient  at  a 
banker's  in  a  separate  box,  in  the  joint  names  of  all  the 
trustees.  The  question  of  how  far  the  trustees  are  justi- 
fied in  allowing  one  of  their  number  to  have  access  to  the 
box  alone,  cannot  be  considered  as  authoritatively  deter- 
mined. The  general  rule,  that  the  trustee  must  use  reason- 
able care,  only  postpones  the  question,  as  the  question 
still  remains  whether  allowing  one  trustee  access  alone  is 
reasonable  care.  Mr.  J.  -Kekewich  in  a  late  case  *  ex- 
presses his  own  opinion  strongly  that  negotiable  securities 
should  not  be  got  at  without  the  consent  of  the  whole 
body ;  but  V.  C.  Wood,  in  a  leading  earlier  case,^  said  that 
it  was  too  much  to  sa}-  that  ordinary  prudence  requires  a 
box  with  three  keys,  and  this  latter  dictum  seems  to  accord 
more  nearly  with  the  general  usage  in  this  country. 

Where  a  bond  could  be  registered,  as  most  bonds  may 
be,  it  would  appear  to  be  the  trustee's  duty  to  have  it 
registered  if  he  gives  his  co-trustee  separate  access  to 
the  securities.*'     In   that  case   the  coupons  only  remain 

1  Dyer  v.  Riley,  51  N.  J.  Eq.  124. 
8  Jones  V.  Lewis,  2  Ves.  Sen.  240. 

*  Matthews  v.  Brise,  6  Beav.  239. 

*  Field  V.  Field,  L.  R.  1894,  1  Ch.425. 

6  Mendes  v.  Guedalla,  2  Johns.  &  Hem.  259,  278. 
6  Lewis  V.  Nobbs,  L.  R.  8  Ch.  D.  591,  594. 


THE  INDIVIDirAL  AS  TRUSTEE.  89 

negotiable,  and  as  one  trustee  may  collect  income  alone, 
he  could  be  reasonably  allowed  separate  control  of  these. ^ 

There  is  no  question  that  a  trustee  who  should  neglect 
for  a  long  time  to  examine  the  securities,  as  for  instance 
for  four  years,*^  or  who  should  confide  them  to  his  co- 
trustee in  an  unusual  manner,*  would  be  liable. 

In  any  event,  it  would  seem  a  wise  precaution  to  register 
bonds  where  possible,  but  the  trustee  is  not  bound  to  do 
so  where  it  is  not  customary  with  prudent  men  to  do  so  in 
caring  for  their  own  securities. 

In  general  a  trustee  is  bound  to  take  the  same  care  of 
the  trust  propert}'  which  any  bailee  is  bound  to  take  of  the 
propei'tj-  put  in  his  charge,  or  such  care  as  a  prudent  man 
would  take  of  his  own. 

Conversion.  —  The  form  in  which  the  property  usually 
exists  at  the  formation  of  the  trust,  in  part  at  least,  is  not 
adapted  to  trust  purposes  ;  but  is  generally  more  adapted 
to  the  needs  of  the  individual  than  to  the  requisites  of 
successive  estates. 

An  individual  may  be  engaged  in  business,  in  a  part- 
nership, or  in  the  management  of  his  property'  for  the 
purposes  of  gain,  and  rarely  in  this  country  has  his 
property  permanently  invested  without  some  regard  to 
speculative  value. 

Thus  where  the  maker  of  a  trust  transfers  a  partnership, 
business  risk,  speculative  or  unproductive  propertj',  to  a 
trustee,  or  in  fact  any  property  which  the  trustee  would 
not  be  authorized  to  invest  in  under  the  terms  of  the 
instrument  or  prevailing  law,  he  must  immediately  and 
without  delay  proceed  to  convert  all  such  property  into 
investments  authorized  by  the  terms  of  the  trust,  and  will 
have  the  implied  power  to  do  so.* 

1  Supra,  p.  48. 

'  Mendes  v.  Gnedalla,  2  Johns.  &  Hem.  259,  277 

•  Matthews  v.  Brise,  6  Beav.  239. 

*  Kinmouth  v.  Brigham,  5  AUeu,  270;   Ames,  491,  n.;  Brown  v. 
Gallatly,  2  Ch.  App.  751, 


90  A  trustee's  handbook. 

Vacant  land,  even  if  it  have  a  large  prospective  value, 
should  be  converted,  since  trust  property  should  yield  the 
usual  income  to  the  life  tenant.  All  undivided  estates 
should  be  converted,  since  the  trustee  has  not  the  absolute 
control  over  them ;  leaseholds,^  and  all  wasting  invest- 
ments, such  as  stocks  in  land  companies  and  mines,  «&;c.,  in 
which  the  principal  is  being  consumed  in  dividends  to  the 
life  tenant,  should  be  converted  into  trust  investments. 

If  the  trustee  delay  beyond  a  reasonable  time,  he  will 
be  liable  for  any  loss  of  the  property  ;  but  where  the  time 
within  which  the  conversion  is  to  be  made  is  expressly 
left  to  his  disci'etion,  he  will  be  protected  in  a  reasonable 
use  of  his  discretion. 

On  the  other  hand,  if  the  settlor  has  provided  for  the 
continuation  of  his  business,  or  the  holding  of  his  securi- 
.ties,  or  if  he  has  left  his  property  prudently  and  perma- 
nently- invested,  not  with  a  view  to  speculation,  the  trustee 
should  not  convert  it,  unless  the  investments  are  such  as 
he  is  forbidden  to  make  by  the  terms  of  the  settlement  or 
by  law,^  since  he  is  entitled  to  put  confidence  where  the 
settlor  did,  and  the  settlor  has  impliedl}'  authorized  these 
investments,  and  in  some  jurisdictions  the  trustee  must  go 
so  far  as  to  get  an  order  of  court  to  change  the  property 
from  the  form  in  which  the  testator  left  it.' 

Thus,  where  the  testator  has  left  bonds  that  will  sell  for 
a  large  premium,*  which  therefore  yield  a  very  small  return 
on  the  money  invested,  the  trustee  need  not  sell  and  rein- 
vest. Nor  will  he  be  held  responsible  for  not  selling  a 
stock  at  par,  which  afterwards  became  worthless,^  if  he 
used  a  reasonable  discretion  in  the  matter. 

No  conversion  can  be  made  of  property  which  the  settlor 

1  Minot  V.  Thompson,  106  Mass.  .583. 

2  Harvard  College  v.  Amory,  9  Pick.  446,  462. 

*  Conn.  Gen.  Stat.  (1888),  §  496;  but  the  distinction  is  doubted. 
Perry,  §  46.5. 

*  N.  Eng.  Trust  Co.  v.  Eaton,  140  Mass.  532. 
5  Bowker  v.  Pierce,  130  Mass.  262. 


THE  INDIVIDUAL  AS  TRUSTEE.  91 

meant  to  be  enjoyed  in  specie ;  as,  for  instance,  a  house 
for  tlie  beneficiary  to  live  in,  or  property  to  be  sold  at  the 
end  of  the  life  estate,  ^  or  household  goods  and  chattels 
meant  for  family  use,^  but  such  intention  must  be  shown 
affirmativelj',  as  the  general  rule  is  that  all  property  is  to 
be  converted.' 

Where  specific  real  estate  is  left  of  which  the  beneficiary 
is  to  have  the  rents  for  life,  the  right  to  use  the  property 
in  specie  is  implied ;  *  but  otherwise  where  the  real  estate 
is  not  specified.  So,  also,  where  the  beneficiary  is  to  have 
the  dividends  on  the  propert}',  enjo3'ment  in  specie  is  not 
implied,  unless  the  property  yielding  the  dividends  is 
specified.* 

Conversion  of  I^eil  into  Personal  Property  and  Vice 
Versa.  —  Unless  the  power  be  given  by  the  trust  instru- 
ment, the  trustee  may  not  convert  the  real  property  into 
personal,  or  vice  versa,  the  reason  of  which  seems  to  have 
originally  depended  on  the  different  way  in  which  real 
estate  and  personal  property  descend  or  could  be  dis- 
posed of  by  will.' 

Thus,  the  trustee  must  not  sell  real  estate  and  invest  in 
bonds,  or  bu)'  real  estate  with  uninvested  funds,  unless 
they  are  the  proceeds  of  a  sale  of  real  estate ;  for  where 
real  estate  is  sold  b}'  an  administrator  or  guardian  under 
order  of  court,  the  proceeds  will  be  treated  as  real  estate 
and  not  as  personal ; '  but  where  the  estate  is  sold  and 
converted  into  personalty  under  order  of  court  by  a  trus- 
tee, it  loses  its  character  as  real  estate.^    If  the  sale  is 

1  Ervine's  Appeal,  16  Pa.  St.  256 ;  Johns  v.  Johns,  172  111.  472. 

2  See  pages  108  and  147. 

8  Howe  V.  Lord  Dartmouth,  2  White  &  Tudor  L.  C,  5th  ed.,  296 ; 
McDouald  v.  Irvine,  8  Ch.  D.  101,  112. 

*  Perry,  §451. 

6  Boys  V.  Boys,  28  Beav.  436.  «  Perry,  §  605. 

T  Mms.  Pub.  Stat.ch.  142,§9;  Fidler  ».  Higirins,"21  N.  J.  Eq.  1.38; 
March  v.  Berrier,  6  Ired.  Eq.  524 ;  Shnmway  v.  Cooper,  16  Barb.  556. 

8  Snowhill  V.  Snowhill,  2  Green's  Ch.  20. 


92  A  trustee's  handbook. 

under  a  power  in  the  trust  instrument,  the  intention  of  the 
maker  will  govern  as  to  whether  the  proceeds  shall  be  con- 
sidered as  real  estate  or  converted  into  personalty  by  his 
authority.^ 

Evidently  the  trustee  cannot  use  the  personal  property 
of  the  estate  to  improve  the  real  estate,'^  and  where  the 
testator  left  an  insurance  policy'  on  a  building  which  was 
subsequently  burned,  rebuilding  with  the  insurance  money 
was  held  to  be  a  conversion  ;  *  but  buj'ing  in  land  to  pro- 
tect a  debt  from  great  loss,  although  a  conversion,  is  an 
authorized  conversion,  and  one  that  will  be  ratified  b}-  the 
court.* 

By  statute  in  many  States,  and  by  equity  jurisdiction 
in  others,  a  court  may  order  a  conversion,^  and  where 
it  does  so,  the  proceeds  of  land  will  not  be  treated  as  real 
estate.®  But  the  court  will  not  order  a  conversion  where 
it  is  contrary  to  the  wishes  of  the  testator ; '  nor  will  it 
ratif}'  an  unauthorized  one. 

Where,  however,  it  has  become  impossible  to  carry  out 
the  testator's  wishes,  the  court  will  authorize  a  conversion 
on  the  cy  pres  doctrine,  which  amounts  to  decreeing  that 
the  wishes  of  the  testator  shall  be  carried  out  in  the  nearest 
possible  wa3',  and  seems  to  rest  on  his  implied  authority.^ 

Where,  however,  the  trust  is  for  an  infant,  the  court 
will  not  usually  authorize  a  conversion,  and  it  has  been 
denied  that  the  court  has  the  power  to  do  so  in  the  absence 
of  statute,  but  such  statutes  exist  in  nearly  all  jurisdic- 
tions.^   If  an  unauthorized  conversion  be  made,  the  infant 

^  Hovey  v.  Dary,  154  Mass.  7. 

2  May  by  statute  in  Pa.     Brip:litly's  Dig.  (1894),  p.  2034,  §  49. 

'  Hassard  v.  Rowe,  1 1  Barb.  22. 

*  Billington's  Appeal,  3  Bawle,  48,  55.  Perry,  §  458,  says  it  is  not 
a  conversion.     Oeslager  v.  Fisher,  2  Pa.  St.  467. 

6  Anderson  v.  Mather,  44  N.  Y.  249 ;  Ex  parte  Jewett,  16  Ala.  409. 

•  Snowhill  V.  Snowhill,  2  Green's  Ch.  20. 

'  Rogers  v.  Dill,  6  Hill,  415  ;  Johns  v.  Johns,  172  111.  472. 

'  Weeks  v.  Hobson,  150  Mass.  377.     See  p.  56,  supra. 

»  Rogers  v.  Dill,  6  HiU,  415;  Williamson  v.  Berry,  8  How.  495, 


THE  IKDIVIDUAX.  AS  TBUSTEE.  93 

ma}-  elect  to  take  the  property  or  the  proceeds  at  his 
majority.^ 

Where  a  trustee  is  given  the  power  to  invest  and  rein- 
vest, or  to  sell  and  manage  the  propert}',  a  power  to  con- 
vert will  be  implied,  and  under  the  general  language  used 
in  most  modern  settlements  the  power  is  generally  im- 
pliedly given,  if  not  expressly  so. 

Investments.  —  It  is  the  trustee's  duty  to  keep  all  the 
trust  funds  at  all  times  fully  invested,  and  if  he  neglects 
doing  so  he  will  be  liable  for  interest  for  the  period  of  any 
unreasonable  delaj'.''  What  is  an  unreasonable  delay  is  a 
question  of  fact  depending  on  all  the  circumstances.* 

Simple  interest  will  be  ordinarily  computed,  but  in 
some  cases  the  trustee  will  be  chargeable  with  compound 
interest,* 

For  instance,  if  the  fund  is  for  accumulation  he  will  be 
charged  with  compound  interest,  since  it  was  his  duty  to 
have  invested  the  interest  as  it  accrued.  So,  too,  if  the 
property  was  invested  in  trade,  since  the  profits  will  be 
presumed  to  have  amounted  to  that  ;*  but  in  this  case  the 
trustee  may  show  that  the  actual  profits  were  less,  since 
the  claim  of  the  beneficiary  is  for  actual  profits  or  simple 
interest." 

In  some  jurisdictions  the  trustee  will  be  charged  com- 
pound interest  as  punishment  for  fraud,  misbehavior,  or 

531  ;  but  the  better  authority  seems  to  be  that  the  court  haa  the 
power  to  order  a  sale.  Wood  v.  Mather,  .38  Barb.  473 ;  s.  c.  44  N.  Y. 
249,  affirmed  on  appeal;  Ex  parte  Jewett,  16  Ala.  409. 

1  Koliinson  v.  Robinson,  22  Iowa,  427 ;  Kaufman  v.  Crawford,  9 
Watts  &  Sar.  131. 

•■'  Kobinson  v.  Robinson,  11  Beav.  371  ;  Cann  v.  Cann,  33  Weekly 
Rep.  40. 

'  Perry,  §  462,  gives  numerous  examples. 

♦  Tn/ra,  p.  127. 

*  Eiiott  V.  Sparrell,  1 14  Mass.  404. 

•  Atty.  Gen.  v.  Alford,  4  DeG.,  M.  &  G.  843,  p.  851 ;  Utica  InB.  Ca 
V.  Lynch,  11  Paige,  520.    Ii\fra,  p.  127. 


94  A  trustee's  handbook. 

for  disobeying  the  orders  of  court ;  ^  but  this  doctrine  is  not 
general  or  commendable  on  principle,  or  universally  fol- 
lowed. The  true  principle  would  seem  to  be  "that  the 
trustee  is  accountable  for  all  interest  and  profits  actually 
received  by  him  from  the  trust  fund,  and  for  all  which 
he  might  have  obtained  by  due  diligence  and  reasonable 
skill."  2 

If  he  was  directed  to  invest  in  a  particular  stock  or 
fund,  the  beneficiar3'  ma}'  elect  to  take  simple  interest,  or 
the  number  of  shares  the  money  would  have  purchased 
with  the  dividends.' 

If  the  trustee  has  no  express  power  under  the  trust  in- 
strument to  change  investments,  the  court  can  authorize  a 
change,  and  will  do  so  for  good  reason;*  and  where  an 
emergenc}'  exists  and  there  is  no  opportunit}-  to  get  a  decree, 
will  ratif)'  a  change  made  b}'  the  trustee  without  authority. 

The  property  being  once  well  invested,  the  investments 
should  not  be  changed  without  a  good  reason  ;^  such  as, 
for  instance,  that  an  investment  has  become  insecure  and 
the  remaindei-man  is  likel}-  to  suffer  loss,  or  because  it  has 
become  unproductive  and  the  life  tenant  is  suffering  loss. 

The  mere  fact  that  the  property  has  increased  in  value 
is  not  a  sufficient  reason  to  sell ;  for  "the  doctrine  can 
readily  be  pressed  so  far  as  to  sanction  a  practice  of 
trading  and  trafficking  in  trust  securities,  which  would  be 
attended  with  dangerous  results  to  the  trust  fund  "  ;  ^  but 
if  it  has  acquired  a  speculative  value  much  above  its  value 
as  an  investment,  the  investment  should  be  changed  so 
that  the  life  tenant  may  receive  the  increase  of  income  he 
is  entitled  to. 

1  McKim  V.  Hibbard,  142  Mass.  422;  Jennison  v.  Hapgood,  10 
Pick.  77. 

2  Perry,  §  472,  end ;  Cruce  v.  Cruce,  81  Mo.  676. 

*  Ouseley  v.  Anstruther,  10  Beav.  4.53,  456. 

*  Murray  v.  Feinour,  2  Md.  Ch.  418. 

6  N.  Eng.  Tr.  Co.  i;.  Eaton,  140  Mass.  532,  533 ;  Murray  v.  Feinour; 
2  Md.  Ch.  418;  Ward  v.  Kitchen,  30  N.  J.  Eq.  31. 
6  N.  Eng.  Tr.  Co.  v.  Eaton,  140  Mass.  532,  537. 


THE  INDIVIDUAL  AS  TRUSTEE.  95 

The  trustee's  duty  in  investing  the  funds  is  a  double 
one,  namel}-,  to  invest  them  securely,  so  that  they  shall  be 
preserved  intact  for  the  remainderman,  and  to  invest  them 
productively',  so  that  they  shall  yield  the  current  rate  of 
interest  to  the  life  tenant.  He  must  hold  the  scales 
evenl}',  and  must  not  sacrifice  the  interest  of  either  bene- 
ficiary ;  and  the  popular  idea  that  securit}*  is  the  only  con- 
sideration is  erroneous,  as  the  trustee  is  equall}'  bound 
to  get  the  customary  income  for  the  life  tenant,  and  can- 
not sacrifice  his  interests  to  those  of  the  remainderman.^ 

The  trust  instrument  may,  and  ordinarilj-  does,  prescribe 
the  kind  or  class  of  propert}'  in  which  the  trustee  may  in- 
vest, and  where  it  does  so  its  provisions  will  supersede 
those  of  the  court  or  legislature ;  ^  but  being  special  powers 
they  must  be  complied  with  strictl}*. 

A  general  authority  to  the  trustee  to  invest  "at  dis- 
cretion" does  not  specify  any  kind  of  property,^  and  does 
not  enlarge  his  powers  ;  but  authority  to  invest  "  in  such 
securities  as  to  him  seems  best,"  with  other  marks  of  con- 
fidence, gives  authority  to  choose  illegal  investments,  (a) 

If  the  trustee  is  authorized  to  invest. in  real  securities 
or  mortgages,  the  class  will  not  be  held  to  cover  a  bond 
secured  by  a  mortgage  of  a  railroad ;  *  but  a  house  for 
the  occupation  of  the  beneficiary  has  been  held  to  be  an 
investment  in  productive  real  estate.® 

Where  a  testator  provides  that  his  trustees  shall  con- 
tinue his  business,  it  is  their  duty  to  do  so ;  but  if  the 
matter  is  permissive,  they  should  not  continue  it  against 
their  judgment.  A  partnership  cannot  be  continued  after 
there  is  a  change  in  the  firm,"   nor  should  the    amount 

^  Kinmouth  v.  Brigham,  5  Allen,  270. 

2  Womack  v.  Austin,  I   So.  Ca.  421  ;   Arnould  v.  Grimstead,  21 
Weekly  Reporter,  155  ;  Denike  v.  Harris,  84  N.  Y.  89. 
«  King  V.  Talbot,  40  N.  Y.  76. 

*  Robinson  v.  Robinson,  11  Beav.  371;  King  r.  Talbot,  50  Barb. 
453  ;  but  see  Knigbt  v.  Boston,  159  Mass.  551,  and  dissenting  opinion. 

*  Schaffer  v.  Wadsworth.  106  Mass.  19  ;  Stone  v.  Clay,  45  S.  W. 
Rep.  80  (Ky.  1898).  **  Cummins  i-.  Cummins,  3  Jo.  &  Lat.  64. 

(a)  Lawton  v.  Lawton,  35  App.  Div.  (N.  Y.)  390. 


96  A  trustee's  handbook. 

invested  in  it  be  increased.^  Wliere  it  is  impossible  to 
comply  with  the  investments  required  by  the  trust  instru- 
ment, recourse  must  be  had  to  the  court  for  directions.^ 

What  classes  or  kinds  of  investments  are  trust  invest- 
ments var}'  in  different  jurisdictions,  and  are  determined 
in  some  by  statute  and  in  others  by  rule  of  court.  Statutes 
in  some  jurisdictions  are  construed  to  be  for  the  protection 
of  the  trustee  merely,  and  not  as  forbidding  other  invest- 
ments than  those  specified  by  law ;  *  yet  where  such  a 
statute  exists,  a  trustee  would  be  imprudent  if  he  invested 
in  other  than  the  specified  securities,*  although  he  might 
be  justified  in  not  converting  unspecified  securities,  if  he 
took  them  from  the  testator." 

Where  there  is  no  statute  or  decision  of  the  highest 
court  fixing  the  class  of  securities  in  which  a  trustee  maj* 
invest,  he  can  safely  follow  the  rule  prescribed  for  the 
investment  of  the  funds  of  savings  banks. 

In  England  the  only  kind  of  investments  formerly  al- 
lowed were  in  the  government  funds ;  ^  but  in  America 
the  total  absence  of  such  securities  in  early  times,  and 
their  relative  scarcity  in  later  times,  gave  rise  of  necessity 
to  a  different  rule,  called  the  American  rule,  which  is  in 
general  terms  that  "  a  trustee  must  observe  how  men  of 
prudence,  discretion,  and  intelligence  manage  their  own 
affairs,  not  in  regard  to  speculation,  but  in  regard  to  the 
permanent  disposition  of  their  funds,  considering  the  prob- 
able income,  as  well  as  the  probable  safety  of  the  capital 
to  be  invested." ' 

The  courts  and  legislatures  in  various  jurisdictions  have, 

1  McNeillie  v.  Acton,  4  DeG.,  M.  &  G.  744. 

2  Mclntire's  Adm'rs  v.  Zanesville,  17  Ohio  St.  352. 
«  Clark  V.  Beers,  61  Conn.  87. 

*  Worrell's  Appeal,  23  Pa.  St.  44. 
6  Supra,  p.  90. 

*  Now  under  the  Trustees  Relief  Acts  a  large  field  is  opened. 
Lewin,  ch.  xiv.  §  4. 

T  Putnam,  J.,  Harvard  College  v.  Amory,  9  Pick.  446,  461 ;  Mat- 
tocks V.  Moulton,  84  Me.  545 ;  King  v.  Talbot,  40  N.  Y.  76. 


THE  INDIVIDUAL  AS  TRUSTEE.  97 

from  this  rule,  evolved  ver^-  different  results,  the  court  de- 
ciding in  New  York  that  a  prudent  man  would  not  invest 
in  the  stocks  of  railroads,  banks,  manufacturing  or  insur- 
ance companies;^  sa3nng  that  *-The  moment  a  fund  is 
invested  in  a  bank,  or  insurance,  or  railroad  stock,  it  has 
left  the  control  of  the  trustees ;  its  safety,  and  the  hazard 
or  risk  of  loss  is  no  longer  dependent  upon  their  skill, 
care,  or  discretion  in  its  custody  or  management,  and  the 
terms  of  the  investment  do  not  contemplate  that  it  ever 
will  be  returned  to  the  trustees  "  ;  ^  but  that  the  ideal  man 
would  invest  in  real  estate,  bonds  of  individuals  secured 
by  first  mortgages  of  real  estate,  first  mortgage  bonds  of 
corporations,  and  principal  securities. 

On  the  other  hand,  the  courts  of  Massachusetts  hold 
that  a  prudent  man  may  invest,  in  addition  to  the  class  of 
securities  allowed  in  New  York,  in  the  stocks  of  good 
business  corporations,  such  as  banks,  railroads,  manu- 
facturing and  insurance  companies,*  and  in  notes  of  indi- 
viduals secured  by  the  stock  of  such  companies,  and  certifi- 
cates of  deposit  of  good  banks.* 

C.  J.  Field,  in  Dickinson's  Appeal,  152  Mass.  184,  at 
p.  187,  lays  down  and  explains  the  Massachusetts  rule  in 
part  as  follows  :  — 

"  A  trustee  in  this  Commonwealth  undoubtedly  finds  it 
diflflcult  to  make  satisfactory  investments  of  trust  property. 
The  amount  of  funds  seeking  investment  is  very  large ; 
the  demand  for  securities  which  are  safe  as  is  possible  in 
the  affairs  of  this  world  is  great ;  and  the  amount  of  such 
securities  is  small,  when  compared  with  the  amount  of 
mone}'  to  be  invested.  ...  A  trustee,  whose  duty  is  to 
keep  tlie  trust  fund  safel}*  invested  in  productive  prop- 
erty, ought  not  to  hazard  the  safety  of  the  fund  under 
any  temptation  to  make  extraordinary  profits.  .  .  . 

1  King  V.  Talbot,  40  N.  Y.  76. 

*  Wootirnff.  J.,  in  King  v.  Talbot,  ubi  supra, 

*  Harvard  College  v.  Amory,  9  Pick.  446. 

*  Hunt,  Appellant,  141  Mass.  51.5. 

7 


98  A  trustee's  handbook. 

"  Our  cases,  however,  show  that  trustees  in  this  Com- 
monwealth are  permitted  to  invest  portions  of  trust  funds 
in  dividend  paying  stocks  and  interest  bearing  bonds  of 
private  business  corporations,  when  the  corporations  have 
acquired,  by  reason  of  the  amount  of  their  property  and 
the  prudent  management  of  their  affairs,  such  a  reputation 
that  cautious  and  intelligent  persons  commonly  invest 
their  own  money  in  such  stocks  and  bonds  as  permanent 
investments." 

In  the  hands  of  a  good  trustee  the  Massachusetts  rule 
is  undoubtedly  superior,  since  it  gives  him  a  larger  oppor- 
tunity to  use  his  skill  and  abilit}'  as  a  financier  for  the 
advantage  of  his  beneficiaries ;  but  undoubtedly  the  Eng- 
lish rule,  or  the  New  York  rule,  is  better  adapted  to  in- 
experienced or  ignorant  trustees,  as  much  less  is  left  to 
their  discretion,  and  unfortunatel}'  trustees  are  too  often 
appointed  from  considerations  of  friendship,  and  not  from 
consideration  of  their  discretion  or  business  abilit3\ 

Tlie  laws  of  the  various  States  give  a  preponderance  in 
favor  of  the  Massachusetts  rule,  and  a  large  majority  of 
carefuU}'  drawn  trust  instruments  give  the  trustees  the 
larger  discretion.^ 

The  rule  prevailing  in  each  of  various  States  is  briefly 
stated  at  the  end  of  this  chapter. 

The  following  kinds  of  investments  are  ever^'where  dis- 
approved, viz. :  loans  on  personal  security  merely  ;  ^  invest- 
ment in  unincorporated  business  ventures,  partnership, 
and  patent  rights  ;  ^  second  mortgages  *  and  mortgages  on 
leasehold  security,^  however  large  the  margin,  since  the 
arst  mortgage  m&y  be  foreclosed ;  unproductive  real  estate, 

*  Perry,  §  456,  opines  to  the  contrary.  See  note  to  Nyce's  Estate, 
40  Amer.  I)ec.  498. 

2  Holmes  r.  Dring,  2  Cox  Eq.  c.  1 ;  Hunt  v.  Gontrum,  80  Md.  64. 
8  Trull  V.  Trull,  13  Allen,  407  ;  Ames,  471,  n. 

*  Gen.  Stat.  Conn.  (1888),  §  49.5  ;  Mattocks  v.  Moulton,  84  Me.  545; 
Porter  i".  Woodruff,  36  N.  J.  Eq.  174 ;  Ames,  485,  n. 

6  Slauter  v.  Favorite,  107  Ind.  292,  296. 


THE  INDIVrDUAL  AS  TRUSTEE.  99 

and  all  investments  of  an  untried  ^  or  si>eculative  nature. 
Investments  without  the  jurisdiction  of  the  trustee  are  not 
usually  approved,  but,  if  the}'  are  in  conformity  with  the 
purposes  of  the  trust,  will  be  sanctioned.^ 

Having  ascertained  the  kind  of  investments  he  may 
make,  the  trustee  must  exercise  a  sound  discretion  in 
selecting  investments  within  the  authorized  class.*  That 
is  to  sa}',  he  must  exercise  the  same  degree  of  intelligence 
and  diligence  that  a  man  of  average  ability  would  exercise 
in  making  his  own  investments ;  *  and  a  provision  of  the 
settlement  giving  him  unlimited  discretion  does  not  alter 
his  duty  to  use  care,  although  it  ma}',  but  will  not  neces- 
sarily, extend  the  class  of  investments  in  which  he  may 
Invest.* 

The  question  of  whether  there  was  a  sound  exercise  of 
discretion '  will  be  determined  according  to  the  state  of 
facts  as  the}'  existed  when  the  investment  was  made,  and 
not  in  the  light  of  later  developments ;  but  as  these  are 
sometimes  difficult  to  reproduce,  or  may  be  forgotten,  any 
memorandum  of  the  inducements  made  at  the  time  maybe 
of  service  in  refreshing  the  recollection. 

Where  the  class  of  investments  allowed  is  large,  it  has 
been  held  imprudent  to  invest  more  than  a  fifth  part  of  the 
estate  in  one  investment.' 

The  margin  of  security  required  on  a  mortgage  loan  is 
generally  fixed  either  by  decision,*  or  by  statute  at  one 
half,  but  the  amount  of  margin  required  also  depends  on 
the  nature  of  the  estate,  a  less  margin,  say  one  third, 

»  Kimball  v.  Reding,  31  N.  H.  352. 

2  Ames,  486,  n. ;  Amory  v.  Green,  13  Allen,  413 ;  Ormiston  v.  Olcott, 
84  N.  Y.  339. 

»  Womack  v.  Anstin,  1  So.  Ca.  421 ;  Re  Whiteley,  83  Ch.  DIv.  347, 
350 ;  Ormiston  v.  Olcott,  84  N.  T.  339. 

♦  In  re  Salmon,  42  Ch.  l)iv.  3.'51  ;  Harv.  Coll.  v.  Amory,  9  Pick.  446. 
»  Tattle  i;.  Gilmore,  36  N.  J.  Eq.  617  ;  King  v.  Talbot,  40  N.  Y.  7& 

•  Brown  v.  French,  125  Mass.  410. 

'  Dickinson's  Appeal,  152  Mass.  184. 
8  In  re  Salmon,  42  Ch.  Div.  351. 


100  A  truster's  handbook. 

being  required  where  the  values  are  more  stable.  In 
England  farming  lands  were  considered  the  most  stable, 
but  in  America  business  property-  in  a  city  would  probably 
be  so  considered. 

Where,  however,  the  settlement  provided  that  the  trus- 
tee should  not  be  liable  for  loss  on  account  of  taking  in- 
sufficient securit}',  he  was  not  excused  for  making  an 
unauthorized  loan  to  a  person  unsecured,^  since  the  loss 
was  on  account  of  going  outside  of  the  class  and  not 
because  the  investment  was  poor  of  its  kind. 

Investments  Allowed  in  various  States.  —  Alabama. 
—  By  statute  may  invest  in  securities  of  State  or  United 
States.  Code  (1896),  §  4174.  Constitution  forbids  any 
law  authorizing  trustees  to  invest  in  bonds  or  stocks  of 
private  corporation.  See  Kandolph  v.  E.  Birmingham 
Land  Co.,  104  Ala.  355.  English  rule  laid  down,  but 
statute  not  alluded  to. 

Arkansas.  —  No  authorities. 

California. — American  rule.  Civil  Code  (1885),  §  2261 ; 
In  re  Cousins's  Estate,  111  Cal.  441. 

Co^omc^o.  —  English  rule.  Statutes  (1891),  §§  2094, 
2095.  United  States  securities,  State  warrants,  or  year 
notes  secured  by  same.  Constitution,  §  359.  See  Ala- 
bama. 

Connecticut.  —  Eev.  Stat.  (1888),  §  495.  First  mort- 
gages to  fifty  per  cent  of  value ;  United  States,  State, 
town,  or  citj'  bonds,  and  savings  bank  securities.  Statute 
not  mandatory,  but  there  is  a  rigid  responsibility  for  other 
investments.     Clark  v.  Beers,  61  Conn.  87. 

Dakota.  —  Civil  Code  (1887),  §  3943.  American  rule, 
no  decisions. 

Delaware.  —  Massachusetts  rule.  Massey  v.  Stout,  4 
Del.  Ch.  274,  288. 

Morida.—  Tlev.  Stat.  (1892),  §  2189.  Bank  stocks. 
Stat.  1892,  §§  1936  and  2095.     Mortgages  and  United 

1  Ryder  v.  Bickerton,  3  Swanst.  80,  n. 


THE  INDIVIDUAL  AS  TKUSTEE.  101 

States  or  State  securities,  which  are  free  of  taxation,  or 
others  ordered  by  court.  These  statutes  refer  to  executors 
and  guardians,  and  not  expressl}'  to  trustees,  but  trustees 
would  be  safe  in  following  the  same  rules. 

Georgia.  —  Code  (1895),  §  3180.  In  stocks,  bonds, 
or  other  securities  issued  by  State.  Any  other  invest- 
ment must  be  made  under  order  of  court.  Brown  v. 
Wright,  39  Ga.  96. 

Idaho.  —  No  authority. 

Illinois.  —  Massachusetts  rule.  Sholty  v.  Sholty,  140 
111.  82;  Sherman  v.  White,  62  111.  App.  271. 

Indiana.  —  Mortgage  securities  allowed  on  sale.  Rev. 
Stat.  (1894),  §§  3415,  3416.  Massachusetts  rule  approved 
in  Slauter  v.  Favorite,  107  Ind.  292,  296  ;  Shuey  v.  Latta, 
90  Ind.  136  ;  but  in  Tucker  v.  State,  72  Ind.  242,  New 
York  rule  approved. 

Iowa.  —  Code  (1897),  §  364.  Stocks^and  bonds  of  United 
States  and  State,  and  mortgages  at  fifty  per  cent  of  value. 

Kansas.  —  No  authorities. 

Kentucky.  —  Stat.  (1894),  §  4706.  Real  estate,  mort- 
gages, stocks  and  bonds,  or  loans  secured  b}'.  But  not  in 
railroads  unless  operated  ten  jears  without  defaulting,  or 
municipal  securities  that  have  not  defaulted  within  ten 
years.  Statute  not  mandator}'.  Substantially  Massachu- 
setts rule.  Fidelity  Co.  v.  Glover,  14  So.  W.  Rep.  243 ; 
8.  c,  90  Ky.  355. 

louisiana.  —  No  authorities. 

Maine.  —  Massachusetts  rule.  Mattocks  v.  Moulton, 
84  Me.  545  ;  Emery  v.  Batchelder,  78  Me.  233. 

Maryland.  —  Hunt  v.  Gontnim,  80  Md.  64  {scmhle). 
English  rule.  Trustee  appointed  by  court  should  get  its 
directions.  Lowe  v.  Convention  of  Prot.  Ep.  Ch.,  35  Atl. 
Rep.  87 ;  s.  c,  83  Md.  409. 

Massachusetts.  —  Massachusetts  rule,  uhi  supra, 

Michigan.  —  No  authorities. 

Minnesota.  — Under  direction  of  court.  Stat.  (1894), 
§  4284. 


102  A  trustee's  handbook. 

Mississippi.  —  Massachusetts  rule.  Smyth  v.  Burns, 
25  Miss.  422 ;  Coffin  v.  Bramlitt,  42  Miss.  194. 

Missouri.  —  Massachusetts  rule.  Gamble  v.  Gibson,  59 
Mo.  585;  Taylor  v.  Hite,  61  Mo.  142,  144;  Drake  v. 
Crane,  127  Mo.  85,  106 ;  Garesche'  v.  Priest,  9  Mo.  App. 
270. 

Montana.  —  Civil  Code  (1895),  §  3013.  Reasonable 
security  and  interest. 

Nebraska.  —  No  authority. 

Nevada.  —  No  authority-. 

New  Hampshire.—  Pub.  Stat.  (1891),  ch.  198,  §  11,  ch. 
178,  §  9.  In  notes  secured  by  mortgage  of  real  estate 
worth  at  least  double,  in  savings  banks,  or  bonds  and  loans 
of  State,  city,  town,  or  county  of  New  Hampshire,  or  of  the 
United  States,  and  in  no  other  way. 

New  Jerseij.  —  Gew.  Stat.  (1895),  p.  2401,  §§  196,  197. 
Allows  mortgage  fifty  per  cent,  rate  of  interest  not  less 
than  five  per  cent,  not  over  six  per  cent.  Rule  of  court 
English  rule,  bonds,  mortgages  of  State  or  United  States. 
Lathrop  v.  Smalley's  Ex'rs,  23  N.  J.  Eq.  192  ;  Halsted  v. 
Meeker's  Ex'rs,  18  N.  J.  Eq.  136  ;  Tucker  v.  Tucker,  33 
N.  J.  Eq.  235. 

New  York.  —  New  York  rule,  ubi  supra.  Rev.  Stat, 
Codes,  etc.  (1896),  p.  2747,  ch.  65.  Authorizes  invest- 
ments in  bonds  of  New  York  cities. 

North  Caroli)7a.  — Code  (1883),  §§  1594  and  3596.  In 
United  States  bonds  or  any  bonds  guaranteed  by  United 
States,  and  in  State  bonds.  Statute  not  mandatory.  Mas- 
sachusetts rule  approved.  Moore  v.  Eure,  7  So.  E.  Rep. 
471  (N.  C);  s.  c,  101  N.  C.  11. 

North  Dakota.  — Rev.  Code  N.  Dak.  (1895),  §  4286. 
Reasonable  security  and  interest.  Anierican  rule.  No  au- 
thorities. 

Ohio.  — Hey.  Stat.  (1890),  §  6413.  Certificate  of  in- 
debtedness of  State  or  United  States,  or  as  approved  by 
court, 

Oregon.  —  No  authorities. 


THE  INDIVrDUAL  AS   TKTJSTEE.  103 

Pennsylvania.  —  Const.,  Art.  3,  §  69.  No  bonds  or 
stocks  of  business  corporation.  Stat.  B rightly 's  Purdon's 
Dig.  (1894),  p.  594,  §§  121, 122,  123.  Court  may  authorize 
investments  in  debt  of  United  States,  State,  or  Philadelphia, 
and  real  securities  ;  bonds  or  certificates  of  debt  of  school 
districts,  municipal  corporations  of  State,  or  bj-  leave  of 
court  in  ground  rents  or  other  real  estate.  Statute  man- 
dator}'. Hemphill's  Appeal,  18  Pa.  St.  303  ;  Baer's  Ap- 
peal, 127  Pa.  St.  (1889),  360. 

Bhode  Island.  — Gen.  Laws  (1896),  ch.  208,  §  12,  gives 
trustees  full  power  and  discretion.  Massachusetts  rule 
followed,  but  should  invest  under  order  of  court.  Peckham 
V.  Newton,  15  R.  I.  321  ;  Grinnell  v.  Baker,  23  Atl.  Rep. 
911;  s.  c,  17  R.  1.41. 

South  Carolina.  — 'Semble,  Massachusetts  rule.  Should 
loan  on  mortgage  if  possible  ;  if  not,  should  loan  on  good 
securit}'.  Nance  v.  Nance,  1  So.  Car.  209  ;  Singleton  v. 
Lowndes,  9  So.  Car.  465  ;  Nobles  v.  Hogg,  15  So.  PI  Rep. 
359,  and  36  So.  Car.  322. 

Tennessee.  — Code  (1896),  §  5434.  In  public  stocks  and 
bonds  of  United  States,  and  report  to  count}'  court. 

Texas.  —  Massachusetts  rule.  Finlay  v.  Merriman,  39 
Tex.  56. 

Fermon^.  —  Revised  Laws  (1894),  §  2617.  In  real 
estate,  or  such  other  manner  as  court  directs.  Semble, 
Massachusetts  rule.  Barney  v.  Parsons,  54  Vt.  623  (1882) ; 
McCloskey  v.  Gleason,  56  Vt.  264. 

Virginia.  —  Semble,  Massachusetts  rule.  Davis  v. 
Harman,  21  Gratt.  194,  p.  201. 

Washington. — Massachusetts  rule  in  practice,  no  au- 
thority. 

West  Virginia.  —  Semble,  English  rule.  Key  v.  Hughes, 
82  W.  Va.  184,  189. 

Wisconsin.  —  English  rule.  Real  estate  or  government 
securities,  or  as  court  directs.  Simmons  v.  Oliver,  74 
Wise.  633. 

Wyoming  —  No  authority. 


104  A  trustee's  handbook. 

Principal  and  Income.  —  Receipts.  —  As  different  per- 
sons are  entitled  to  the  principal  and  income  of  the  trust 
fund,  the  determination  of  wliether  a  receipt  or  charge 
shall  belong  to  principal  or  income  is  of  great  importance, 
and  the  erroneous  determination  of  the  question  may  make 
the  trustee  liable  for  a  large  amount ;  as,  for  instance, 
where  he  has  paid  the  life  tenant  sums  of  money  which 
belonged  to  principal,  and  should  have  been  invested,  and 
these  he  has  no  right  to  recover  back  in  most  cases, ^  and 
which  even  if  he  have  the  right  he  may  not  be  able  to 
recover  back  owing  to  the  beneficiary's  want  of  financial 
responsibility.  In  fact,  the  question  will  usually  arise  after 
the  death  of  the  life  tenant,  when  the  remainderman  comes 
into  possession,  and  when  it  is  too  late  to  recoup  from 
the  income. 

In  general,  at  the  time  the  estate  comes  into  the  trus- 
tee's hands  it  is  all  principal,  in  whatever  condition  it  may 
happen  to  be,  and  all  yearly  increase  thereafter  is  income. 
This  would  always  be  the  case  where  the  property  comes 
into  the  trustee's  hands  without  delaj'  and  invested  in 
proper  trust  securities  ;  but  if  there  is  a  deferred  receipt  on 
the  conversion  of  the  estate,  the  rule  is  different. 

Where  for  an}'  reason  property  does  not  come  into  the 
hands  of  the  trustee  for  some  time  after  the  beginning  of 
the  trust,  and  in  the  meanwhile  the  life  tenant  has  no  bene- 
fit from  it,  the  fund  when  realized  must  be  so  apportioned 
that  the  life  tenant  will  get  the  usual  rate  of  interest  from 
the  beginning  of  the  trust,  and  the  remainder  will  be  the. 
principal  fund.*^ 

This  may  be  the  case  where  the  amount  of  a  legacy  or 
other  fund  is  not  immediately  received  or  not  received  in  fuU,^ 

1  Bate  V.  Hooper,  5  DeG.,  M.  &  G.  338 ;  Downes  v.  Bullock,  25 
Beav.  54,  59,  62.  See  L.  Langdale,  Fyler  v.  Fyler,  3  Beav.  550,  563, 
for  striking  example,  and  infra,  p.  154. 

2  Kinmouth  !;.  Brigham,  5  Allen,  270 ;  Hagan  v.  Piatt,  48  N.  J.  Eq 
206;  Westcott  v.  Nicker.son,  120  Mass.  410. 

«  Cox  V.  Cox,  L.  R.  8  Eq.  343. 


THE  INDIVIDUAL  AS  TRUSTEE.  105 

or  where  the  property  being  an  unsuitable  investment  is 
sold  for  conversion  at  an  interval  after  the  trust  went  into 
effect.  But  where  the  time  of  conversion  is  left  to  the 
discretion  of  the  trustee,  there  will  be  no  apportionment. (a) 

The  rule  is  the  same  whether  the  propertj^  be  converted 
because  it  is  unproductive,  as  for  instance  vacant  land,  a 
bottomry  bond  or  similar  security  where  the  principal  and 
income  are  included  in  one  sum,  or  a  defaulted  note  or 
obligation  on  which  the  whole  amount  is  not  recovered,  or 
where  an  obligation  is  in  default  and  the  security  has  been 
realized  on;  or  whether  it  be  converted  because  the  earn- 
ings are  greatly  in  excess  of  interest,  as  in  the  case  of  a 
business  or  partnership,  or  on  a  wasting  investment  such 
as  a  land  stock  where  the  dividends  will  ultimately  exhaust 
the  security.  In  either  case  the  rule  is  the  same,  namel}', 
that  sum  is  to  be  found  which  at  the  current  rate  of  inter- 
est for  the  period  from  the  beginning  of  the  trust  to  the 
time  of  conversion  will  yield  the  amount  realized.  The 
sum  so  ascertained  is  the  principal,  and  the  interest  is  the 
income  payable  to  the  immediate  beneficiarj'. 

For  instance,  in  a  case  where  a  trustee  who  had  wasted 
the  estate  was  removed  and  only  part  of  the  estate  was  re- 
covered by  his  successor,  the  amount  of  the  original  estate 
was  $30,000,  and  the  whole  amount  recovered  after  one 
year  and  two  months  was  $26,000.  The  tenant  for  life 
got  $1,742.50,  which  is  the  interest  at  six  per  cent  on 
$24,257.50,  the  new  capital  for  one  year  and  two  months  ;  ^ 
but  where  the  return  is  excessive,  if  a  definite  intention 
on  the  part  of  the  maker  of  the  trust  can  be  shown 
that  the  life  beneficiary  shall  have  all  the  proceeds,  i.  e. 
shall  enjoy  the  income  in  specie,  his  intention  will  pre- 
vail, and  the  whole  profits  will  be  paid  to  the  life  tenant  as 
income.* 

1  Parsons  v.  Winslow,  16  Masa.  361  ;  Maclaren  r.  Stainton,  L.  R. 
11  Eq.  382;  Meldon  i'.  Devlin,  31  App.  Div.  146  (N.  Y.)  ;  Greene  ». 
Greene,  19  R.  I.  619. 

a  Howe  v.  Lord  Dartmonth,  2  White  &  Tudor,  L.  C.  Eq  .  6th  Am. 
ed.,  296;  Corle  v.  Monkhouse,  47  N.  J.  Eq.  73  ;  Wcstcott  v.  Nickerson, 
120  Ma.ss.  410. 

(a)  Hite's  Devisees  v.  Hite's  Executors,  93  Ky.  257. 


106  A  trustee's  handbook. 

The  amount  recovered  as  damages  for  an  injury  or  a 
taking  ^  need  not  be  apportioned,  as  the  fund  invested  will 
yield  an  income,^  and  the  amount  recovered  will  bear 
interest  from  the  time  of  the  taking. 

The  converse  proposition,  i.  e.  the  payment  of  a  bet- 
terment or  removal  of  an  involuntary  encumbrance,  falls 
under  the  same  rule. 

Gain  and  Loss. — The  general  rule  is  that  any  gain 
other  than  the  usual  yearly  income,  and  any  loss  other 
than  the  usual  yearly  charges,  fall  to  the  principal  of  the 
fund. 

Thus  real  estate  or  securities  ma}'  advance  largely  in 
value  without  any  corresponding  increase  in  income,  and 
the  whole  gain  will  belong  to  the  principal  of  the  fund,* 
and  the  life  tenant  will  get  no  benefit  from  the  increase, 
unless  he  be  in  a  position  to  insist  on  a  sale  and  reinvest- 
ment of  the  property,  so  as  to  yield  an  adequate  return,* 

1  Heard  v.  Eldredge,  109  Mass.  258. 

2  "Van  Vronker  v.  Eastman,  7  Met.  157. 

8  N.  Eug.  Trust  Co.  v.  Eaton,  140  Mass.  532.  In  re  Gerry,  103  N.  T. 
445,  450.     Gain  on  foreclosure :  Parker  v.  Johnson,  37  N.  J.  Eq.  366. 

*  The  learned  editor  of  the  4th  edition  of  Perry  on  Trusts  very 
justly  suggests  that  some  doubt  has  been  thrown  on  this  question,  so 
far  as  it  concerns  the  gain  in  value  of  stocks,  in  a  few  jurisdictions  by 
the  principles  laid  down  by  the  courts  in  their  decisions  in  collateral 
matters.     Perry,  §  545,  n.  1. 

In  Wiltbank's  Appeal,  64  Pa.  St.  256,  where  the  trustee  subscribed 
for  new  stock  given  as  a  bonus,  sold  the  subscription  at  a  premium, 
the  court  decided  that  the  premium  was  a  product  of  the  stock  and 
belonged  to  the  life  beneficiary.  And  in  Earp's  Appeal,  28  Pa.  St. 
368,  the  court  seemed  to  imply  that  any  increase  in  value  of  stock 
from  accumulated  profits  belongs  to  the  life  beneficiary.  And  in  Van 
Doren  v.  Olden,  19  N.  J.  Eq.  176,  the  Chancellor  decided  that  all  accu- 
mulations since  the  purchase  of  the  stock  belonged  to  the  life  tenant, 
and  sent  the  case  to  a  master  to  determine  how  much  they  were. 

It  is  to  be  noticed  that  in  none  of  these  cases  was  the  exact  question 
raised  as  to  whom  the  appreciation  in  value  of  stock  belonged,  and 
whether  the  same  was  income  or  principal ;  although  tlie  language  of 
the  decisions  seems  to  cover  this  point  as  well  as  the  question  of  accu- 


THE  INDIVIDUAL  AS   TKUSTEE.  107 

Gain  or  loss  in  continuing  a  business  temporarily  until 
it  is  converted  is  to  be  apportioned,^  but  where  the  busi- 
ness is  conducted  under  direction  of  the  trust  instrument, 
.ordinarily  all  the  income  will  go  to  the  life  beneficiary,^  and 
the  loss  of  one  jear  will  be  made  up  out  of  the  profit  of  the 
next ;  but  it  is  wholly  a  question  of  intention  to  be  deter- 
mined by  the  construction  of  the  trust  instrument. 

If  the  trust  estate  consists  of  country  real  estate,  timber 
cut  for  thinning  will  be  income,  other  timber  principal, 
and  it  has  been  held  that  gravel  sold  will  be  income,  but 
probably  not  to  such  an  extent  as  to  be  waste.* 


mulations  of  income.  I  am  not  aware  that  it  has  heen  seriously  con- 
tended that  a  different  rule  should  be  applied  to  the  increase  in  value 
of  stocks  from  that  applied  to  the  increase  in  value  of  real  estate ;  yet 
these  cases  do  seem  to  indicate  that  in  those  jurisdictions  any  accumu- 
lations of  profits  belong  to  income  and  not  principal ;  which  throws 
the  whole  question  into  doubt,  since  it  is  impossible  to  tell  infallibly,  in 
the  case  of  any  corporation,  how  much  of  their  savings  are  properly  set 
aside  as  a  necessary  fund  to  carry  on  the  business,  or  reserves  against 
depreciation,  and  how  much  of  the  funds  are  excess  of  profit  which 
might  be  properly  distributed. 

In  such  questions  the  practical  solution  is  the  determination  of  the 
matter  by  the  directors,  in  which  case  all  sums  added  to  the  funds  of 
the  company  become  part  of  the  principal  and  the  property  of  the 
remaindermen. 

The  premium  realized  by  the  sale  of  the  stock  is  no  better  criterion, 
since  the  experience  of  every  business  man  will  show  him  that  the 
fluctuations  in  the  prices  of  stock  are  chiefly  governed  by  the  state  of 
business  and  many  other  considerations,  and  are  affected  very  little  by 
the  amount  of  accumulated  income  in  the  treasury.  Hemmenway  v. 
Hemmenway,  1.34  M.i.ss.  446. 

As  the  principal  question  was  not  raised  in  tliese  cases,  and  as 
carrying  out  their  reasoning  to  its  logical  conclusion  would  involve 
such  anomalous  results,  it  would  seem  that  trustees  may  act  safely, 
even  in  these  jurisdictions,  on  the  rule  above  stated,  and  credit  all  gains 
in  value  in  stocks  as  well  as  real  estate  to  principal,  and  in  other  juris- 
dictions this  principle  is  established  beyond  a  doubt.  See  New  Eng- 
land Trust  Co.  V.  Eaton,  140  Mass.  532. 

»  Underhill,  250. 

a  Heighe  v.  Littig,  63  Md.  301. 

«  Earl  Cowley  v.  Wellesley,  L.  R.  1  Eq.  657. 


108  A  trustee's  handbook. 

If  the  trust  property'  consists  in  part  of  chattels,  which 
are  intended  to  be  used  and  not  converted  into  cash  and 
invested,  the  life  tenant  may  wear  them  out  in  ordinary' 
use,  and  need  not  replace  them.^ 

If  the  propert}'  consists  of  farming  stock  it  should  be 
converted, '^  unless  intended  to  be  used  in  specie. 

The  life  tenant  cannot  sell  it,  even  though  it  be  replaced 
by  other  kind  of  stock ;  as,  for  instance,^  where  cows  are 
unprofitable,  they  cannot  be  replaced  by  horses,  but  the 
beneficiary  for  life  may  use  them  up,  and  need  not  replace 
them  when  they  die  ;  *  and  the  natural  increase  will  belong 
to  him.^  Where,  however,  the  stock  is  left  with  a  farm, 
and  there  is  an  intention  expressed  or  implied  that  the 
farm  shall  be  kept  up,  so  much  of  the  increase  as  is  neces- 
sary to  keep  up  the  herd  will  belong  to  principal,  and  only 
the  excess  to  income.^ 

Implements,  furniture,  and  cattle,  in  fact  all  propertj' 
that  will  wear  out  in  use,  must  be  bought  out  of  income. 
And  where  it  is  necessarj'  to  replace  chattels  which  are 
wearing  out  in  use,  the  trustee  raaj-  withhold  some  of  the 
yearly  income  to  make  a  sinking  fund  for  that  purpose.'' 

Any  income  which  is  rightfully  accumulated  and  added 
to  the  principal,  will  lose  its  character  as  income  and  be- 
come a  gain  to  principal.® 


1  Wootten  v.  Burch,  2  Md.  Ch.  190.  See  infra,  p.  147;  supra,  p. 
91 ;  Woods  V.  Sullivan,  1  Swan's,  507. 

2  Burnett  v.  Lester,  53  111.  325. 
8  Leonard  v.  Owen,  93  Ga.  678. 

*  Poindexter  v.  Blackburn,  1  Ired.  Eq.  286 ;  Braswell  r.  Morehead, 
57  Am.  Dec.  586,  n. ;  Saunders  v.  Haughton,  57  Am.  Dec.  581. 

5  Saunders  v.  Haughton,  8  Ired.  Eq.  217 ;  Lewis  v.  Davis,  3  Mo. 
133;  Major  v.  Herndon,  78  Ky.  124;  Hunt  v.  Watkins,  1  Humph. 
(Tenn.)  498. 

*  Calhoun  v.  Furgeson,  3  Rich.  Eq.  160;  Robertson  r.  Collier,  1 
Hill  Eq.  370  (S.  C).  But  see  Flowers  v.  Franklin,  5  Watts  (Pa.),  265  ; 
life  tenant  was  to  keep  up  farm ;  increase  held  to  go  to  remainderman. 

■f  Re  Honsman,  4  Dem.  404. 

8  Minot  V.  Tappan,  127  Mass.  333 ;  Blythe  v.  Green,  38  Atl.  743 
(N.  J.  Ch.). 


THE  INDIVIDUAL  AS  TRtJSTEE.  109 

Dividends.  —  The  current  dividends  on  stocks  belong 
wholly  to  income,  even  when  the  stock  has  been  bought  at 
a  premium,  since  the  premium  is  only  a  part  of  the  price 
paid  for  an  investment,  or  a  definite  share  in  a  property 
or  business,  which  is  presumably  worth  the  price  paid, 
and  any  gain  or  loss  in  price  is  the  gain  or  loss  of  the 
principal.^ 

If,  however,  the  investment  is  a  wasting  one,  such  as  a 
mining  or  land  stock,  the  tenant  for  life  will  be  entitled  to 
receive  only  the  current  rate  of  interest  on  the  inventory 
or  cost  value  of  the  investment,  and  the  balance  will  be 
applied  to  reduce  the  valuation,  and  the  amount  which  he 
is  entitled  to  receive  will  be  calculated  each  year  on 
the  new  principal  made  by  the  credits  of  the  preceding 
dividends.^ 

When  the  excess  of  the  dividends  has  thus  entirely 
wiped  out  the  cost  of  the  investment,  all  the  dividends  will 
go  to  principal,  and  the  life  tenant,  though  an  apparent 
loser,  is  not,  because  he  will  receive  the  dividends  on  the 
new  investments  to  the  same  amount  which  was  originally 
invested,  which  is  all  he  is  entitled  to. 

The  rule  has  alread}'  been  explained  as  to  the  receipts 
from  an  investment,  which  is  not  a  proper  trust  invest- 
ment, and  therefore  to  be  converted.* 

Extra  Dividends.  —  The  law  is  not  uniform  in  all  juris- 
dictions as  to  whom  extra  dividends  belong.* 

The  rule  originally  laid  down  was  that  cash  dividends 
are  income,  and  stock  dividends  principal,*  but  recent 
decisions  are  to  the  effect  that  it  is  immaterial  whether  the 

1  N.  Eng.  Trust  Co.  v.  Eaton,  140  Mass.  532.    See  note.  p.  106. 

'  Snch  investments  should  ordinarily  be  converted.  Supra,  p.  89. 
Or  the  life  tenant  may  be  entitled  to  the  full  dividend  by  the  terms 
of  the  settlement.    Reed  v.  Head,  6  Allen,  1 74. 

'  Supra,  p.  105. 

*  Subject  treated,  Underhill,  p.  226,  n. ;  Perry,  §  545  and  n. 

»  Barclay  v.  Wainewright,  14  Ves.  Jon.  66;  L.add,  J.,  in  Lord  v 
Brooks,  52  N.  H.  72,  77. 


no  A  trustee's  handbook. 

dividend  be  in  stock,  mone}-,  or  the  granting  of  a  valuable 
right  to  take  new  stock.^ 

In  Connecticut,^  Maine,'  and  Rhode  Island,*  a  distribu- 
tion of  stock  was  held  to  be  principal,  but  in  those  cases, 
and  especially  in  Brown's  Petition,  the  court  did  not  go 
bej'ond  deciding  the  case  in  hand,  and  it  would  not  be 
safe  to  assume  ihat  in  another  case  under  similar  circum- 
stances they  would  not  follow  the  English  rule.  At  any 
rate,  they  evidently'  disapprove  the  Pennsylvania  rule.® 

By  the  Englisii  rule  followed  in  Massachusetts,®  New 
York,''  Georgia,^  and  the  United  States  Supreme  Court,' 
it  is  well  settled  that,  if  the  distribution  be  part  of  the  sur- 
plus earnings,  it  will  be  income  and  the  propert}"  of  the 
life  beneficiary,  but  if  it  be  a  distribution  of  part  of  the 
company's  capital,  it  will  belong  to  the  principal  or  re- 
mainderman. That  the  company  may  in  good  faith  add 
part  of  its  profits  to  its  capital,  and  if  it  does  so  the  life 
beneficiary  cannot  complain,  as  he  will  get  the  benefit  of 
the  increased  efficiency.^** 

It  follows,  therefore,  that,  in  determining  whether  a 
dividend  is  income  or  principal,  the  vote  ordering  the  divi- 
dend is  the  best  or  onh'  guide  as  to  whether  the  distribution 
is  one  of  the  company's  surplus  earnings  or  of  its  principal 
fund." 

In  Pennsylvania  the  question  has  been  otherwise  de- 

i  Earp's  Appeal,  28  Pa.  St.  368;  Vinton's  Appeal,  99  Pa.  St.  434; 
Leland  i-.  Hayden,  102  Mass.  542,  550. 

3  Brinley  v.  Grou,  50  Conn.  66. 

8  Richardson  n.  Richardson,  75  Me.  570. 

*  Greene  r.  Smith,  17  R.  I.  28 ;  Brown,  Pet'r,  14  R.  I.  371. 

6  In  re  Barton's  Trusts,  L.  R.  5  Eq.  238. 

6  Heard  v.  Eldredge,  109  Mass.  258. 

^  Kernochan's  Case,  104  N.  Y.  618;  but  the  rule  is  now  reversed, 
see  McLouth  v.  Hunt,  154  N.  Y.  179. 

8  Ga.  Code  (1895),  §  3091  ;  Millen  v.  Gnerrard,  67  Ga.  284. 

»  Gibbons  i.".  Mahon,  136  U.  S.  .549. 

10  Granger  v.  Bassett,  98  Mass.  462. 

11  In  re  Barton's  Trusts,  ubi  supra;  Re  Bouch  ;  Sproule  v.  Bouch,  29 
Ch.  D.  635 ;  Rand  v.  Hubbell,  115  Mass.  461  ;  Gibbons  v.  Mahon,  136 
U.  S.  549. 


THE  INDIVIDUAL  AS  TRUSTEE.  Ill 

cided,  the  court  going  on  the  principle  that  all  the  accumu- 
lations of  the  company  during  his  lifetime  belong  to  the 
life  beneficiary,  whether  they  be  declared  in  the  form  of 
dividends  or  not,^  and  this  view  of  the  case  has  been  fol- 
lowed in  New  Jersey,'^  New  Hampshire,'  and  South  Caro- 
lina,* and  that  a  master  is  to  be  appointed  to  ascertain 
the  amount.  Accordingly,  where  a  valuable  right  to  sub- 
scribe to  new  stock  was  given,  in  Massachusetts^  it  was 
held  to  be  principal  and  in  Pennsylvania  ®  income. 

In  late  cases  in  New  York,  Kentucky,  Tennessee,  and 
Maryland,''  the  hopeless  conflict  of  authority  is  recog- 
nized, and  the  Massachusetts  rule  has  been  repudiated  in 
so  far  as  the  corporate  action  determines  the  character  of 
the  payment  as  between  life  tenant  and  remainder-man, 
this  being  considered  a  question  for  the  court  to  deter- 
.mine  on  consideration  of  actual  facts.  Moreover,  the 
Pennsylvania  rule  has  not  been  followed  to  its  filll  extent, 
and  has  been  repeatedly  criticised  elsewhere.*  It  certainly 
presents  great  practical  difficulty  for  a  court  to  determine 
what  are  legitimate  reserves  for  depreciation  and  improve- 
ment of  plant,  and  distinguish  them  from  net  earnings 
which  belong  to  stockholders  for  the  time  being. 

Ordinary  Dividends  not  Apportioned.  —  No  part  of  a 
company's  property  belongs  to  a  stockholder  until  it  is 
separated  and  declared  as  a  dividend ;  hence  a  dividend  is 
an  independent  debt  payable  to  the  stockholders  of  a  cer- 
tain day,  and  remains  principal  until  separated  from  the 
other  funds  and  declared  payable  to  the  stockholders,* 
and  therefore  is  never  apportionable,  and  is  always  pay- 

1  Earp's  Appeal,  28  Pa.  St.  368. 

a  Van  Doren  i-.  Olden,  19  N.  J.  Eq.  176  ;  97  Amer.  Dec.  6.50. 

8  Lord  V.  Brooks,  52  N.  H.  72.      ♦  Cobb  v.  Fant,  56  S.  C.  1. 

6  Atkins  V.  Albree,  12  AUen,359.    «  Wiltbank's  Appeal,  64  Pa.  St.  256. 

'  McLouth  17.  Hunt,  154  N.  Y.  179 ;  Hite's  Devisees  v.  Hite's  Exs., 
93  Ky.  257  ;  Thomas  v.  Gregg,  78  Md.  545 ;  Pritchitt  v.  Nashville 
Trust  Co.,  96  Tenn.  472. 

8  Perry,  §  545,  note  by  Frank  Parsons;  Underbill,  226,  n.  1. 

«  Lowell,  Transfer  of  Stock,  §  52,  n.  3,  authorities  ;  Perry,  §  545 ; 
Granger  r.  Bassett,  98  Mass,  462  ;  Bates  v.  McKinley,  31  Benv.  280; 
bat  see  supra,  note  4,  p.  106. 


112  A  TRUSTEE'S  HANDBOOK. 

able,  no  matter  when  paid,  to  the  stockholder  entitled  at 
the  time  specified  in  the  vote ;  ^  but  if  the  trustee  sold  a 
stock  just  before  the  dividend  day  to  defraud  the  life  ten- 
ant or  ])uy  land  according  to  the  terms  of  the  trust  instru- 
ment,^ the  life  beneficiary  would  be  entitled  to  so  much  of 
the  proceeds  as  would  equal  the  dividend  lost  by  the  sale. 

Interest  sometimea  Apportioned.  —  All  rents  and  gen- 
erally the  whole  amount  received  as  interest  is  income,  and 
in  England  the  rule  is  not  subject  to  any  exception.' 

In  some  States,  if  a  bond  is  purchased  at  a  premium, 
sufficient  of  the  interest  must  be  set  aside  yearly  to  wipe 
out  the  premium  at  the  maturity  of  the  obligation,  since  a 
bond  purchased  at  a  premium  is  a  wasting  security,  which 
would  otherwise,  out  of  justice  to  the  remainderman,  be 
converted  ;  *  but  it  follows  that  no  part  of  the  interest  on  a 
bond  which  is  part  of  the  property  originally  settled  need 
be  credited  to  principal,  since  there  is  no  obligation  to  con- 
vert the  bond,  even  though  it  be  worth  more  than  par.^ 

The  practice  of  buying  bonds  which  sell  at  a  discount, 
to  balance  those  bought  at  a  premium,  is  not  sound,  as 
the  difference  of  price  is  not  simply  a  question  of  interest, 
but  is  more  often  one  of  security,  nor  can  the  loss  on  one 
investment  be  set  off  against  the  gain  on  another.® 

Interest  accrues  from  day  to  day,  and  will  therefore  be 
apportioned  upon  a  sale  of  the  security  on  which  it  accrues, 
or  upon  the  termination  of  the  life  estate.'  The  interest 
accruing  up  to  the  date  of  sale  or  death  being  income,  and 
the  balance  belonging  to,  and  being  part  of,  the  security 

1  Clive  V.  Clive,  Kay,  600.  Contra,  Johnson  v.  Bridgewater  Mfg. 
Co.,  14  Gray,  274 ;  Flite's  Devisee.s  v.  Hite's  Executors,  93  Ky.  257  ;  but 
see  Lang  v.  Lang's  Ex.,  57  N.  J.  Eq.  325,  where  dividends  are  appor- 
tioned like  interest.       2  Londeshorough  i'.  Somerville,  19  Beav.  295. 

*  Hemenway  v.  Hemenway,  134  Mass.  446,  450. 

*  Ibid.  In  re  Hoyt,  27  App.  Div.  (N.  Y. )  285 ;  N.  Y.  Life  Ins.  &  Trust 
Co.  V.  Baker,  38  App.  Div.  (N.  Y.)  417.  No  sinking  fund  in  Kentucky 
and  Pennsylvania.  Hite's  Devisees  v.  Kite's  Executors,  ubi  supra ; 
Boyer's  Estate,  44  W.  N.  C.  528  (Orphan's  Ct.  Phila.,  1899). 

6  Shaw  V.  Cordis,  143  Mass.  443.  6  Infra,  p.  127. 

'  Dexter  v.  Phillips,  121  Mass.  178. 


THE  INDIVmUAJL  AS  TRUSTEE.  113 

turned  over.  And  this  is  the  rule  even  where  the  debt  is 
secured  by  a  bond  oi*  mortgage.^  But  where  the  interest 
is  payable  by  a  coupon,  which  might  be  detached  and  sold 
separately,^  and  would  then  be  a  separate  bond,  the  rule, 
in  the  absence  of  statute,  is  otlierwise,  and  there  is  no  ap- 
portionment ;  but  where  the  statute  exists,  even  coupons 
are  apportioned.* 

In  some  jurisdictions  there  are  statutes  apportioning 
rents  and  coupons  and  annuities  on  the  termination  of  a 
life  estate  settled  by  will.*  This  statute  does  not  apply 
to  settlements  made  by  deed,  which  are  governed  by  the 
common  law. 

Payments.  —  Any  loss  to  the  fund  b}-  depreciation  of 
the  market  value  of  the  propert3'  belongs  to  principal,  and 
a  loss  occasioned  b}-  a  breach  of  trust  stands  on  the  same 
footing.* 

Discharge  of  Encumbrance.  —  If  there  is  an  encumbrance 
on  the  estate,  as,  for  instance,  a  mortgage,  if  at  once  dis- 
charged it  is  paid  from  the  remainder,  but  if  carried  ^  the 
interest  is  chargeable  to  income,  and  the  principal  to  the 
corpus  of  the  fund,  and  this  is  true  even  when  the  estate 
is  not  charged  until  a  long  period  —  say  ten  years  —  after 
the  settlement.'' 

Similarl3',  where  the  trustees  are  compelled  to  discharge 
an  involuntary  encumbrance,  such  as  a  betterment  assess- 
ment *  or  judgment,  the  cost  is  apportioned  between  income 
and  principal.  The  whole  amount  is  charged  to  principal 
and  deducted  from  the  estate  of  the  remainderman,  and 

1  Dexter  v.  Phillips,  121  Mass.  178. 

2  Clark  V.  Iowa  City,  20  Wall.  583,  589. 
'  Adams  v.  Adams,  139  Mass.  449. 

*  Mass.  Pub.  Stat.  (1882),  eh.  136,  §  25. 

^  Parsons  v.  Winslow,  16  Ma-ss.  361.    See  p.  105,  supra, 

*  Van  Vronker  v.  Eastman,  7  Met.  157. 

'  Maclaren  v.  Stainton,  L.  R.  11  Eq.  382. 

*  A  betterment  assessment  is  a  tax,  but  not  an  ordinary  one,  and 
as  between  life  tenant  and  remainderman  is  treated  as  an  encumbraoce. 
Plympton  v.  Boston  Dispensary,  106  Mass.  544. 

8 


il4  A  trustee's  handbook. 

the  income  is  charged  interest  thereon  jearh*,  or  the  inter- 
est ma3*  be  funded  and  charged  in  a  lump ;  or  if  the  life 
tenant  and  remainderman  are  beneficiaries  of  the  same 
funds,  the  principal  is  paid  out  of  the  corpus,  and  the  life 
tenant  loses  interest  and  tlie  remainderman  the  principal. 

Alterations  and  Repairs.  —  Alterations  and  additions 
to  real  estate  whereb\'  the  usefulness  or  rental  value  is  in- 
creased are  chargeable  to  principal,^  but  the  repairs  or 
expenditures  which  are  necessary  to  maintain  the  property 
in  proper  condition  are  chargeable  to  income.^ 

It  is  often  a  a  difficult  question  of  fact  to  decide  whether 
a  specified  expenditure  is  an  addition  to  the  propertj-  or  a 
current  repair ;  but  the  rule  may  be  stated  that,  where  re- 
pairs improve  the  property-  to  the  extent  of  their  cost,  they 
are  chargeable  to  principal,  and  are  a  judicious  investment 
of  the  trust  funds.^ 

For  instance,  the  addition  of  an  elevator  to  a  building 
which  previously  had  none  will  be  charged  to  principal, 
•while  putting  in  a  new  elevator  in  the  place  of  an  old  one 
will  be  a  repair  chargeable  to  income* 

So  also  an  expenditure  may  be  in  the  nature  of  both  an 
addition  and  a  repair,  and  is  then  chargeable  to  principal 
only  to  the  extent  to  which  it  benefits  the  propert}' ;  and 
in  some  States  ^  there  are  statutes  allowing  an  apportion- 

1  Sohier  v.  Eldredge,  103  Mass.  345;  Caldecott  v.  Brown,  2  Hare, 
144. 

"  Underhill,  pp.  250,  251,  states  that  in  the  absence  of  express  pro- 
vision in  the  settlement,  the  equitable  life  tenant  is  not  bound  to  repair, 
and  so  all  repairs  should  be  made  under  order  of  court  and  apportioned 
by  it.  The  English  cases  have  arisen  almost  exclusively  where  the 
property  was  in  the  possession  of  the  equitable  life  tenant,  and  not 
being  managed  as  an  investment  by  the  trustees  as  is  general  in  Amer- 
ica. Lewin,  pp.  642,  644.  In  America  the  rule  is  as  stated  in  the 
text,  and  a  trustee  should  charge  necessary  current  repairs  to  income. 
Parsons  v.  Winslow,  16  Ma-^s.  361 ;  Hepburn  v.  Hepburn,  2  Bradf. 
(N.  Y.)  74;  Little  v.  Little,  161  Mass.  188. 

3  Sohier  v.  Eldredge,  103  Mass.  345. 

*  Little  V.  Little,  161  Mass.  188.  *  Pennsylvania. 


THE  INDIVIDUAIi  AS  TRUSTEE.  115 

ment  in  such  oases.  And  in  an}-  case  of  doubt,  it  is  well 
to  get  the  iiislructions  of  the  court  before  undertaking  an 
extensive  job,  which,  if  charged  wholly  to  the  income,  might 
be  ver}-  burdensome.^ 

All  expenditures  on  newlj  acquired  property  which  are 
necessary  to  put  it  in  condition  to  let  or  to  hold,  whether 
they  are  in  the  nature  of  repairs  or  additions,  are  charge- 
able to  principal.  For  instance,  fencing  in  land  or  re- 
pairing a  house  to  obtain  a  tenant.  These  expenses, 
although  chargeable  to  income  at  other  times,  on  the 
acquisition  of  a  new  estate  will  be  considered  as  so  much 
additional  purchase  raone}*,  and  chargeable  to  principal.* 

All  ordinary  current  expenses  are  charged  to  income. 
Shaw,  C.  J.,  sa3S  income  means  net  income  after  deduct- 
ing taxes,  repaii-s,  and  ordinary  current  expenses ;  ^  and 
in  some  jurisdictions  the  premiums  paid  for  securities,  (a) 

Taxes.  —  All  annual  taxes,  except  those  assessed  on 
vacant  land,  are  charged  to  income.^  As  vacant  land 
gives  no  return  to  the  life  tenant,  but  his  whole  income 
might  be  used  in  preserving  the  property  of  the  remainder- 
man,^ all  charges  against  it,  including  taxes,  are  charge- 
able to  principal.'  The  taxes  on  a  dwelling-house  given 
for  life  are  payable  by  the  occupier,  and  not  from  the 
general  income,  in  the  absence  of  the  manifestation  of  a 
contrary  intention,  {b) 

Special  assessments,  such  as  betterment  assessments, 
sewer  taxes,  etc.,  are  chargeable  to  principal  or  are  ap- 
portioned as  specified.^ 

Insurance.  —  Insurance  premiums  are  expressly  charge- 
able to  income  by  the  terms  of  most  carefully  drawn  trust 
instruments,  and  where  no  express  provision  is  made  in 

1  Caldecott  v.  Brown,  2  Hare,  144. 

2  Parsons  v.  Winslow,  16  Mass.  361  ;  N.  Eng.  Trust  Co.  v.  Eaton, 
140  Mass.  532.  '  Watts  v.  Howard,  7  Met.  478. 

♦  Plympton  v.  Dispensary,  106  Mass.  544. 
'  Stone  V.  Littlefield,  151  Mass.  485  ;  Underbill,  p.  246  n. 
"  Pierce  v.  Burroughs,  58  N.  H.  302 ;  Stone  v.  Littlefield,  151  Mass. 
485 ;  Hite's  Devisees  v.  Hite's  Executors,  93  Ky.  257. 
^  Plympton  v.  Dispensary,  106  Mass.  544. 

(a)  New  York  Life  Ins.  Cu.  i-.  Sands,  53  N.  Y.  S.  320.    Supra,  p.  112. 
(6)  Wiggiu  V.  Swett,  6  Met.  194  ;  Araory  v.  Lowell,  104  Mass.  265. 


116  A  trustee's  handbook. 

the  instrument  the  general  practice  is  to  charge  them  to 
income.^ 

In  case  of  a  partial  loss,  the  funds  recovered  would  be 
used  in  repairing.^  In  case  of  a  total  loss,  the  fund  should 
be  invested,*  and  could  be  used  in  rebuilding  if  such  an 
investment  is  authorized,  and  will  retain  its  character  as 
real  estate,  although  it  ma}'  be  otherwise  where  the  insur- 
ance existed  at  the  time  of  the  will,  as  in  such  case  the 
policy  was  a  personal  asset  at  the  outset.* 

If  the  life  tenant  insures  the  property,  the  remainderman 
has  no  claim  on  the  fund  recovered,  the  contract  of  insur- 
ance being  merely  to  indemnify'  the  individual  for  his  loss. 
The  fund  I'ecovered  does  not  represent  or  stand  in  the  place 
of  the  building  destroyed.^    But  where  a  trustee  insures 

1  There  is  singularly  little  authority  on  the  question.  Probably  be- 
cause in  early  times  and  in  England  insurance  was  not  considered  a 
necessary  precaution  of  an  ordinarily  cautious  man,  and  because  fail- 
ure to  insure  by  a  life  tenant  is  not  permissive  waste  (Harrison  v. 
Pepper,  166  Mass.  28S),  and  unfortunately  what  authority  there  is  is 
conflicting.  In  Graham  v.  Roberts,  8  Ired.  Eq.  99,  the  court  expresses 
the  opinion,  and  in  the  New  York  case,  Re  Housman,  4  Dem.  404, 
the  court  decides,  on  the  authority  of  Peck  v.  Sherwood,  56  N.  Y. 
615  (in  which  no  reason  is  stated),  that  the  premiums  are  appor- 
tionable  according  to  the  respective  interests  of  the  life  tenant  and 
remaindermen,  and  Perry,  §  487,  says  that,  there  being  no  obligation 
to  insure,  the  premium  should  not  be  charged  to  the  life  tenant 
without  his  consent.  See  also  Wiggin  v.  Swett,  6  Met.  194.  On  the 
other  hand,  in  Darcy  v.  Croft,  9  Ir.  Ch.  19,  in  a  carefully  considered 
opinion,  the  cost  of  insuring  the  life  of  the  annuitant  was  held  charge- 
able to  income,  and  this  case  seems  to  state  the  true  reason,  which  is 
that  the  income  is  chargeable  with  all  the  ordinary  annual  expenses  of 
maintaining  the  property,  (see  Shaw,  C.  J.,  Watts  v.  Howard,  7  Met. 
478,  482.)  of  which  insurance  is  now  like  repairs  and  taxes,  one  of 
the  ordinary  and  necessary  incidents  of  maintaining  real  estate,  and 
the  ordinary  practice  of  charging  the  premiums  to  income  is  entirely 
consonant  with  the  theories  of  law,  and  with  the  law  as  now  enacted  by 
statute  in  England.     Trustees  Act,  1893,  §  18. 

2  Brough  V.  Higgins,  2  Gratt.  408. 
8  Lerow  v.  Wilmarth,  9  Allen,  382. 

*  Haxall's  Ex'rs  v.  Shippen,  10  Leigh,  536.  In  that  case,  the  life 
tenant  gave  bond  to  invest  money  and  pay  over  on  death  of  life  tenant, 
heuce  had  no  right  to  convert. 

6  Harrison  v.  Pepper,  166  Mass.  288. 


THE  ESTDIVIDUAL  AS  TRUSTEE.  117 

the  building,  he  will  insure  all  his  interest  which  is  subject 
to  the  claim  of  both  Ufe  tenant  and  remainderman,  and  in 
such  case  the  fund  recovered  would  stand  in  the  place  of 
the  property'  destroyed  as  the  property  of  the  remainder- 
man of  which  the  life  tenant  has  the  use.^ 

Expenses.'^ — The  charges  of  the  trustees  for  managing 
the  property,  which  are  by  the  way  of  a  commission  on 
income,  are  charged  to  income.  Extra  charges  for  ser- 
vices which  are  beneficial  to  the  fund,  are  charged  to 
principal,  or  may  be  apportioned  equitably.^ 

Brokers'  commissions  on  change  of  investment,  where 
it  was  expressly  provided  that  all  expenses  were  to  be 
charged  to  income,  were  properly  classed  as  expenses  and 
charged  to  income,*  but  in  a  purchase  or  sale  of  real  es- 
tate the  brokers'  commission  is  in  practice  considered  as 
part  of  the  price  of  the  property,  and  so  is  generally 
charged  to  principal,  and  would  probably  be  allowed  so 
generally ;  and  in  the  absence  of  expressed  intention,  the 
same  reasoning  would  seem  to  apply  to  the  purchase  of 
stocks  and  bonds. 

Legal  expenses  of  settling  the  interpretation  of  the  trust 
instrument  or  appointment  of  new  trustees  are  borne  by  the 
principal,*  and  so  also  the  expenses  of  recovei-ing  the  fund 
or  paying  it  out.  So  also  the  legal  expenses  of  protect- 
ing the  property,  but  the  legal  expenses  of  collecting  the 
income,  or  of  determining  the  matter  of  payments  charge- 
able to  income,  fall  naturally  to  income. 

The  Distribution  of  the  Trust  Fund.  —  The  trustee 
must  distribute  the  trust  fund  properlj'  at  his  peril,  and  if 
he  distributes  the  wrong  amount,  or  pays  it  to  the  wrong 
person,  must  bear  the  loss. 

1  Graham  v.  Roberta.  8  Tred  Eq.  99  ;  Haxall's  Ex'rs  v.  Shippen,  10 
Leigh,  536 ;  Re  Housman,  4  Dein.  404. 

2  As  to  what  expenses  are  allowed,  see  supra,  p.  29. 

»  Gordon  v.  West,  8  N.  H.  444.  But  see  Spangler's  Estate,  21  Pa. 
St.  335,  where  such  charges  were  lield  to  be  the  ordinary  charges  of  pro- 
tecting the  property,  and  so  charged  to  income.     Underbill,  p.  246,  n. 

<  Heard  c.  Kldredge,  103  Mass.  258. 

6  Rowland  v.  Green,  108  Mass.  283. 


118  A  TRUSTEE'S  HANDBOCtfv. 

The  fact  that  he  has  been  diligent  or  has  taken  advice 
will  not  save  him,  and  his  only  protection  is  to  obtain  a 
decree  of  distribution  from  the  court.  But  he  will  be  pro- 
tected if,  in  paying  one  beneficiary  whose  share  becomes 
due  before  the  others,  he  pays  him  on  a  fair  valuation  of 
the  estate,  although  the  securities  depreciate  so  that  the 
others  get less.^ 

In  some  States  the  fund  itself  may  be  paid  into  court 
for  distribution ;  '^  and  statutes  generally  exist  giving 
courts  of  probate  authority  to  decree  distribution  in  the 
case  of  testamentary  trusts. 

As  these  courts  have  the  custody  of  the  fund  itself, 
and  the  decree  is  against  the  property,  and  not  merely 
against  the  parties  to  the  suit,  provided  the  proper  notices 
have  been  given,  the  validity  of  the  decree  cannot  be 
questioned  by  any  form  of  pleading  or  proof.^  The  notice 
to  be  given  is  generally  prescribed  by  statute,  or  in  the 
absence  of  statute  by  the  court. 

Where  the  proper  statutory  authority  does  not  exist,  or 
in  trusts  which  are  not  created  by  the  decree  of  a  probate 
court,  resort  may  be  had  to  a  court  of  equity  for  a  decree 
of  distribution.  In  such  suits  care  must  be  taken  to  make 
all  parties  interested  parties  to  the  suit,  or  they  will  not  be 
concluded,^  and  if  there  be  any  doubt  as  to  whether  all 
the  proper  parties  have  been  joined  the  trustee  may  re- 
quire the  payees  to  give  security  to  reimburse  against  any 
claims  that  may  arise. 

The  common  practice  of  getting  a  final  account  show- 
ing a  distribution  allowed  by  the  court  is  objectionable, 
as  although  the  allowance  of  the  account  operates  as  a 

1  Frere  v.  Winslow,  4.5  Ch.  Div.  249. 

2  Annot.  Code  Iowa  (1897),  §  370  ;  Comp.  Stat.  Mont.  (1887),  §  235 ; 
Rev.  Stat.  Ohio  (1890),  §  5592;  Stat.  Okla.  (1893),  §  4149 ;  Rev.  Stat, 
Wy.  (1887),  §  2940. 

3  Loring  Adm.  v.  Steineman  et  al.,  1  Met.  204;  Lamson  y.Knowles, 
170  Mass.  295;  Pierce  v.  Prescott,  128  Mass.  140.  See  statutes 
passim. 

*  Cathaway  v.  Bowles,  136  Mass.  54. 


THE  INDIVIDUAL  AS  TRUSTEE.  119 

decree  against  all  parties  to  the  auit,^  it  is  not  conclusive 
on  all  the  world,^  and  a  share  improperly  paid  over  cannot 
be  recovered  back.* 

The  trustee  must  pay  the  distributive  shares  at  his  peril 
to  the  proper  distributees.  The  fact  that  he  pays  on  a 
forged  order,  or  an  invalid  assignment,*  or  on  a  power  of 
attorney  which  he  supposes  to  be  good,  but  which  has  in 
fact  been  revoked,  will  not  protect  him.  Now,  by  statute 
in  England,  a  trustee  paying  in  good  faith  under  a  revoked 
order  is  protected,*  but  the  law  is  not  so  in  America. 

He  must  not  pay  a  minor's  share  to  himself  or  his  parent 
or  guardian  without  an  order  of  court,®  or  he  may  be  re- 
quired to  pay  him  again  when  he  comes  of  age. 

He  may  perpetuate  the  evidence  of  his  payments  by  an 
account  filed  in  court,  and  allowed  after  notice  to  all  inter- 
ested, or  under  statutory  law,  by  filing  the  vouchers  in 
court.^  The  former  course  is  preferable,  as  all  parties  to 
the  suit  are  forever  barred  by  the  suit,  and  he  cannot  de- 
mand a  receipt  or  discharge  where  he  simply  follows  out 
the  distribution  according  to  the  terms  of  the  trust,  and 
cannot  refuse  to  pay  until  he  gets  a  receipt.* 

As  a  distribution  of  the  fund  without  a  decree  of  the 
court  or  a  decree  of  a  court  itself  is  an  overt  act,  the 
statute  of  limitations  will  begin  to  run  from  that 
time.' 

If  the  trust  was  "  to  convey  "or  "  divide  "  the  real  es- 
tate, a  conveyance  is  necessary,  and  a  power  of  sale  is 

1  Emery  v.  Ratchelder,  132  Mass.  452. 

2  Palmer  v.  Whitney,  166  Mass.  306. 
8  Billiard  v.  Fulford,  4  Ch.  Div.  389. 

*  Palmer  ».  Whitney,  166  Mass.  306.  The  court  in  a  decree  of 
distribution  will  not  pass  on  the  validity  of  assignments.  Lenz  v.  Pres* 
cott,  144  Mass.  505. 

«  Underhill,  p.  365. 

8  Perry,  §  624.     But  see  Sparhawk  v.  Buell,  9  Vt.  41. 

1  Mass.  Pub.  Stat.  (1882),  ch.  144,  §  12. 

»  Chadwick  r.  Ileatley,  2  Coll.  137.     Supra,  p.  77. 

*  Jones  t>.  Home  Savings  Bank,  118  Mich.  155. 


120         A  TRUSTEE'S  HANDBOOK. 

implied ;  ^  otherwise,  real  estate  will  usually  vest  in  the 
distributees  by  the  provisions  of  the  instrument.'* 

As  these  duties  are  so  onerous,  compensation  is  gener- 
ally allowed,  and  is  usually  two  and  a  half  or  one  per  cent 
on  the  amount  turned  over." 

In  some  jurisdictions  the  amount  is  regulated  by  statute. 

The  trustee  may  retain  the  funds  in  his  hands  until  the 
account  is  settled  and  he  has  been  paid  his  charges.* 


VI.     LIABILITIES. 

To  Strangers.  —  A  trustee  is  personally  liable  on  his 
contracts,  even  where  he  describes  himself  as  a  trustee  or 
adds  the  word  "  trustee  "  to  his  signature.^  He  may, 
however,  expressly  limit  his  liability  to  the  extent  of  the 
trust  estate,®  but  the  terms  of  the  contract  must  show 
clearly  that  the  contractor  relied  wholly  on  the  credit  of 
the  trust  estate  and  not  on  the  personal  credit  of  the 
trustee.'  Without  such  a  provision  the  trustee  will  be 
personally  liable  even  under  a  contract  ordered  by  the 
court ;  since  the  order  of  court  only  ensures  his  right  to 
indemnity  from  the  trust  property,  and  does  not  affect  a 
stranger.*  He  is  also  liable  on  the  covenants  in  a  deed 
or  lease,  and  on  the  recitals  in  a  deed,  if  he  should  have 
special  knowledge  of  their  accuracy.® 

He  is  not  bound  to  give  information  to  strangers  with 
whom  the  beneficiary  is  negotiating   a  loan,   and  if  he 

1  Parker  v.  Seeley,  56  N.  J.  Eq.  110. 

2  How  V.  Waldron,  98  Mass.  281.  3  Supra,  p.  32. 

*  Foster  v.  Bailey,  157  Mass.  160. 

6  Bowea  v.  Penny,  76  Ga.  743;  Taylor  v.  Davis,  110  U.  S.  330. 
Supra,  p.  65. 

*  Taylor  v.  Davis,  ut  supra;  Packard  v.  Kingman,  109  Mich.  497. 

■f  Mitchell  V.  Whitlock,  121  N.  C.  166 ;  Connally  v.  Lyons,  82  Texas, 
664;  Mulrein  v.  Smillie,  25  App.  Div.  135  (N.  Y.). 

8  Gill  V.  Carmine,  55  Md.  339  ;  Glenn  v.  Allison,  58  Md.  527. 

9  Lewin,  p.  211,  n. ;  Story  v.  Gape,  2  Jur  (N.  S.)  706.  Supra, 
p.  84. 


THE  INDIVIDUAL  AS  TRUSTEE.  121 

innocently  makes  an  erroneous  representation,  is  not  liable 
therefor.^ 

He  will  be  liable  personally  where  he  assumes  to  be 
a  trustee,  when  'as  a  matter  of  fact,  owing  to  defective 
appointment,  he  is  not  a  trustee,  and  will  have  no  right  to 
indemnity  from  the  trust  property. 

If  he  exceeds  his  powers,  as  for  instance  in  selling  or 
leasing  to  a  stranger,  and  the  stranger  gets  no  title,  he 
will  be  liable  for  the  price,  and  also  for  damages,  if  any. 

He  is  liable  personally  as  stockholder  in  a  corporation,^ 
and  for  taxes,^  and  in  tort  as  owner  of  the  property  on 
which  there  is  a  nuisance.*  In  all  these  cases  he  has  a 
right  of  indemnity  from  the  trust  fund  only  so  far  as  he 
has  acted  strictly  within  his  powers. 

He  is  liable  criminally  for  embezzlement  if  he  misap- 
propriates the  trust  funds,  even  though  under  the  pretence 
of  a  loan  to  himself ;  ^  for  he  cannot  change  himself  from 
a  trustee  of  the  funds  into  a  debtor  without  the  consent 
of  the  beneficiary;'  and  the  fact  of  consent  must  be 
established  by  positive  proof.' 

If  a  defaulting  trustee  is  a  lawyer,  his  breach  of  trust  is 
a  cause  for  disbarment.' 

Liability  to  Beneficiaries.  —  The  liabilities  of  trustees  to 
their  beneficiaries  are  joint  and  several,  and  a  decree  may 
be  enforced  against  either,  even  if  not  the  one  actually 
at  fault,  and  irrespective  of  liability  among  themselves ;  ® 

1  Low  V.  Boaverie,  3  Ch.  (1891)  82. 

2  Supra,  p.  24.  '  Supra,  p.  25.  *  Supra,  p.  26. 

6  Mass.  Pub.  Stat.  (1882),  ch.  20.3,  §  46  ;  Rev.  Code  N.  Dak.  (1895), 
§  7464;  Rev.  Stat.  Ohio  (1890),  §  6842;  Anuot.  Laws  Oregon  (1892), 
§  1800;  Code  Tenn.  (1896),  §  6.')92. 

»  Marshall  v.  Marshall,  53  Pa.  Rep.  617  (Col.  1898);  Gunter  v. 
Janes,  9  Cal.  643,  p.  659. 

'  In  re  Farmers'  Loan  &  Trust  Company,  47  App.  Div.  (N.  Y.)  448. 

8  Thompson  v.  Finch,  8  DeG.,  M.  &  G.  560. 

•  McCartin  v.  Traphagen,  43  N.  J.  Eq.  323 ;  Bermingham  v.  Wil« 
cox,  120  CaL  467. 


122  A  TRUSTEE'S  HANDBOOK. 

but  this  joint  liability  ends  with  the  trustee's  death,  and 
his  estate  is  liable  only  for  the  acts  during  the  trustee's 
lifetime. 

Each  transaction  stands  by  itself,  hence  the  gain  on  one 
cannot  set  ofif  the  loss  on  another.  All  the  gains  belong 
to  the  trust  estate,  and  not  to  the  trustee,  hence  they  do 
not  belong  to  him  to  set  against  his  liabilities ;  ^  but  in 
administering  a  fund  as  a  whole,  one  transaction  cannot 
be  picked  apart  to  show  gains  and  losses,  as,  for  instance, 
in  developing  real  estate,  the  loss  on  a  building  built  to 
make  the  rest  more  readily  salable  is  part  of  the  whole 
transaction,  and  not  a  separate  loss.^ 

The  trustee  is  liable  to  his  beneficiary  for  any  loss  of 
the  trust  property  arising  from  his  neglect  of  duty.  As, 
for  instance,  where  the  trust  is  created,  and  he  neglects 
to  collect  or  secure  the  property,^  or  inexcusably  allows 
rents  to  fall  in  arrears.* 

Thus,  if  he  neglects  to  insure  where  it  is  his  duty  to  do 
so,  he  will  be  liable  for  the  loss,^  or  if  he  neglects  to 
invest,  he  will  be  liable  for  interest.® 

He  is  liable  not  only  for  a  loss  directly  due  to  his  neg- 
lect, but  also  where  it  is  only  indirectly  due  to  his  neglect ; 
as,  for  instance,  if  he  leaves  the  property  improperly  in 
the  hands  of  his  co-trustee  or  an  agent,  and  it  is  misap- 
propriated, destroyed,  or  stolen.''  Though  he  will  not 
be  liable  for  the  acts  and  crimes  of  strangers  through 
which  the  property  is  lost,  if  he  has  done  his  duty  in 
taking  care  of  the  property,  as,  for  instance,  where  the. 
property  is  properly  deposited  and  then  stolen,^  yet  if  he 

1  Wiles  V.  Gresham,  2  Drew.  258;  Blake  v.  Pegrara,  109  Mass.  541. 

2  Vyse  V.  Foster,  L.  R.  7  H.  L.  318. 

8  Fenwick  c.  Greenwell,  10  Beav.  412.     Supra,  p.  83. 
*  Tebbs  V.  Carpenter,  1  Mad.  291 ;  In  re  Mclntyre,  24  App.  Div. 
(N.  Y.)  167. 

6  As  to  his  duty,  see  supra,  p.  86,  n.  3. 
6  See  supra,  p.  93 ;  White  v.  Ditson,  140  Mass.  351. 
^  Bostock  V.  Floyer,  L.  R.  1  Eq.  26.     Supra,  p.  87. 
8  Jones  r.  Lewis,  2  Ves.  Sen.  240. 


THE  INDIVIDUAL  AS  TRUSTEE.  123 

has  been  remiss  in  his  duty  he  will  be  liable  for  any  loss 
that  may  occur  in  any  manner ;  ^  as,  for  instance,  if  he 
has  mingled  the  trust  money  with  his  own  funds  in  the 
bank,  he  will  be  liable  for  the  loss  by  the  failure  of  the 
bank  ;  while  if  the  property  were  deposited  in  the  names 
of  the  trustees,  they  would  not  be  liable  unless  they  were 
careless  in  selecting  the  depositary. 

Liability  for  Co-triistee.  —  As  a  general  rule  he  is  liable 
for  his  own  acts  and  neglects  onl^-,  and  is  not  liable  for  the 
act  or  default  of  his  predecessor  in  the  trust, '^  or  of  his  co- 
trustee,' unless  he  joins  in  the  breach  of  trust,  or  negligently 
permits  it ;  *  but  he  can  easily  make  himself  so  by  giving  a 
joint  bond,  which  he  need  never  do,  each  trustee  having  a 
right  to  give  his  separate  bond,^  or  joining  in  a  fraudulent 
account'  He  will  be  liable  where  he  has  handed  the 
funds  to  his  co-trustee,  allowed  him  to  receive  them,  or 
looked  on  at  a  breach  of  trust ;  ^  as,  for  instance,  by  join- 
ing in  a  receipt  for  the  money  on  a  sale  of  securities  and 
afterwards  leaving  the  pi'operty  with  his  co-trustee,®  though 
in  that  case,  if  he  can  show  affirmatively  that  there  was  a 
necessity  to  join  in  the  receipt  and  leave  the  funds  in  the 
hands  of  the  co- trustee  afterwards,  he  will  escape  liability  ;' 
or  by  neglecting  his  duty  and  allowing  his  co-trustee  to 
act  improperly  as  his  agent, ^°  and  to  do  alone  what  ought 

1  Civ.  Code  Cal.  (1885),  §  2236;  Comp.  Laws  Dak.  (1887),  §  3929. 

2  Blake  v.  Pegram,  109  Mass.  541.     See  supra,  pp.  80,  82. 

8  Stowe  V.  Bowen,  99  Ma.ss.  194  ;  Hinson  v.  Williamson,  74  Ala.  180, 
195 ;  Townley  v.  Sherburne,  3  White  &  Tudor,  L.  C.  Eq.,  6th  Am.  ed., 
Notes,  964. 

*  Comp. Laws Dak.(1887), §3932;  CiT.CodeCal.(1885),§  2239rt»e9. 

*  Ames  V.  Armstrong,  106  Mass.  15. 

*  Horton  v.  Brocklehurst,  29  Beav.  504. 
7  Wilkins  v.  Hogg,  3  Gi£E.  116. 

*  It  is  to  be  noticed  that  the  ordinary  form  of  a  deed,  which  all  the 
truMees  must  sign,  contains  a  receipt  for  the  consideration. 

»  Monell  V.  Monell,  5  Johns.  Ch.  283. 

10  Dak.  Civ.  Code  (1887),  §  3932;  Cal.  Civ.  Code  (1885),  §  2239; 
Oliver  v.  Court,  8  Price,  127, 166.    Supra,  p.  75,  as  to  collection  of  incom*. 


124  A  TRUSTEE'S  HANDBOOK. 

to  have  been  done  jointly ;  or  by  standing  by  and  allow- 
ing his  co-trustee  to  commit  a  breach  of  trust. ^ 

So  also  the  trustee  will  be  liable  if  he  puts  or  unjustifi- 
ably leaves  the  trust  property  in  the  exclusive  control  of 
his  co-trustee  and  it  is  lost.^  He  may  not  rely  on  the 
representations  of  his  co-trustee  as  to  the  status  of  the 
property,  but  must  ascertain  it  himself.^ 

Thus,  where  pro'perty  was  left  in  trust  to  the  widow  and 
brother  of  the  testator,  for  the  benefit  of  the  widow  for 
life  and  then  for  others,  and  the  widow  managed  the 
trust  and  the  brother  never  did  anything  about  it,  and  the 
widow  wasted  the  property  and  died  insolvent,  the  brother 
was  held  liable  for  the  whole  loss/  So,  too,  where  the 
securities  were  deposited  with  a  banker  without  inspection 
for  four  years,  and  one  trustee  was  allowed  to  draw  them 
out.^  So,  too,  where  the  trustees  improperly  divide  the 
management  of  the  trust,  each  will  be  liable  for  the  other, 
as,  for  instance,  where  each  of  two  trustees  took  half  the 
property  and  invested  it  in  his  respective  business  and 
paid  interest  on  it,  and  then  one  failed,  the  other  was 
held  to  make  up  the  loss.^  So,  too,  if  he  joins  in  a 
fraudulent  or  unfair  account,^  or  in  a  receipt  for  money 
which  is  afterwards  misapplied. 

A  provision  in  the  trust  instrument  that  one  trustee  shall 
not  be  liable  for  the  acts  or  defaults  of  the  other  does  not 
relieve  him  of  liability  in  such  cases,  as  he  is  made  liable, 
not  because  the  other  is  at  fault,  but  because  he  neglects 
his  own  duties,  and  so  gives  the  co-trustee  the  oppor- 

1  Crane  v.  Heam,  26  N.  J.  Eq.  378.  See  supra,  p.  87,  for  distinction 
between  leaving  income  and  principal  in  the  hands  of  one  trustee. 

2  Supra,  pp.  88,  89.  But  see  In  re  Westerfield,  32  App.  Div.  (N.  Y.) 
324,  where  trustee  who  was  excluded  from  management  was  not  held 
liable. 

8  Bates  V.  Underbill,  3  Redf.  (N.  Y.)  365. 

<  Clark  V.  Clark,  8  Paige,  153.  6  Supra,  p.  89. 

®  Graham  v.  Austin,  2  Gratt.  273.  It  is  not  necessary  to  exhaust  the 
remedy  against  the  defaulting  trustee  first.  Bermingham  v.  Wilcox, 
120  Cal.  467. 

7  Blake  v.  Pegram,  109  Mass.  541. 


THE  INDIVIDUAL  AS  TRUSTEE.  125 

tunity  to  waste  the  estate ;  hut  the  clause  may  be  drawn 
so  as  to  exempt  him/  and  he  will  not  be  liable  if  the  loss 
occurred  by  following  out  the  directions  of  the  trust  in- 
strument, as  for  instance  in  leaving  money  in  the  hands 
of  A,  where  the  instrument  says  he  may  do  so.'^ 

A  trustee  who  has  made  good  a  loss  occasioned  by  a 
breach  of  trust  not  amounting  to  a  fraud,  is  entitled  to 
contribution  from  his  co-trustees ;  but  where  there  has 
been  a  joint  fraud  the  court  will  not  help  him  against  his 
partner  in  wrong.^ 

A  trustee  who  has  been  guilty  of  no  fi-aud  himself,  but 
who  has  been  deceived  by  his  co-trustees  *  as  to  the  state  of 
the  funds,  or  who  has  made  good  a  loss  caused  by  his  co- 
trustee's fraud,  has  a  right  not  only  to  contribution  but  to 
full  indemnity  from  his  co-trustee,  who  has  had  the  benefit 
of  the  misappropriation.*  Or  he  may  recover  indemnity  of 
the  beneficiary  who  has  received  the  benefit  of  a  breach  of 
trust  induced  by  him.* 

Liability  for  Errors.  —  The  trustee  is  liable  for  any  loss 
caused  by  his  exceeding  his  powers ;  as,  for  instance,  if 
he  convert  the  trust  property  without  having  the  power, 
he  may  be  compelled  to  replace  it  in  kind  or  make  good 
its  increase  in  value.' 

Or  where  he  invests  in  securities  in  which  he  has  no 
power  to  invest,  even  though  honestly,  he  will  be  liable ; 
as,  for  instance,  where  the  trustee  was  authorized  to  invest 
in  real  security,  and  held  railroad  bonds  belie^•ing  them 
to  be  authorized,  he  was  held  liable.^ 

1  Wilkins  V.  Hogg,  3  Giff.  116  ;  White  &  Tudor,  L.  C.  Eq.,  6th  Am. 
ed.,  note  to  Brice  v.  Stockes,  1029,  1030. 

2  Kilbee  v.  Sneyd,  2  Moll.  186,  200 ;  Pass  v.  Dundas,  29  W.  R.  332. 
8  Underbill,  p.  479. 

*  Thompson  v.  Finch,  8  DeC,  M.  &  G.  560. 

6  Bahin  v.  Hughes,  31  Ch.  Div.  390 ;  McCartin  v.  Traphagen,  43 
N.  J.  Eq.  323  ;  Sherman  v.  Parish,  53  N.  Y.  483. 

«  Rahy  v.  Ridehalgh,  7  DeG.,  M.  &  G.  104;  Griffith  v.  Hughes,  3 
Ch.  (1892),  105  ;  and  under  statutes  even  from  a  married  woman  with- 
out power  of  anticipation. 

">  /n/ra,  p.  142.  ^  Robinson  v.  Robinson,  11  Bear.  871. 


126         A  TRUSTEE'S  HANDBOOK. 

So,  too,  he  is  liable  if  he  pays  the  wrong  person,^  as  e.  g. 
where  he  paid  a  sum  due  an  infant  to  his  father,  without 
order  of  court,  the  infant  could  demand  the  sum  on  com- 
ing of  age.^  Or  where  a  beneficiary  has  encumbered  his 
estate,  and  there  is  notice  among  the  papers.  Or  where, 
under  a  misapprehension,  he  has  paid  sums  which  should 
be  principal  to  the  life  tenant,  or  vice  versa. 

The  trustee  is  liable  for  his  errors  in  judgment  (unless 
expressly  exempted)  in  the  performance  of  his  duties,  but 
not  in  the  exercise  of  his  discretionary  powers.^ 

The  trustee  is  held  to  perform  his  duties  with  reason- 
able discretion,*  that  is  to  say,  with  the  same  intelligence 
that  a  reasonable  man  would  use  in  the  transaction  of  his 
own  affairs ;  the  fact  that  he  is  incompetent  is  no  excuse. 
He  must  be  at  the  pains  to  learn  his  duties.^  For  in- 
stance, it  being  the  duty  of  the  trustee  to  invest  the  trust 
funds,  if  he  invests  too  large  a  proportion  in  certain  secu- 
rities, or  if  he  uses  poor  judgment  in  investing,  he  will  be 
liable  for  the  loss,  irrespective  of  his  honesty.  But  he  is 
not  supposed  to  be  infallible,  and  where  he  has  acted  with 
that  amount  of  discretion  which  an  ordinarily  prudent 
man  uses  in  his  own  affairs,^  and  honestly,  he  will  be  pro- 
tected ;  and  even  where  he  has  acted  in  good  faith  only 
the  court  will  treat  him  leniently,  and  give  him  the  benefit 
of  the  doubt,'  especially  if  he  is  acting  under  advice  of 
counsel,*  since  this  fact  shows  that  he  used  due  diligence, 
though  it  is  not  in  itself  an  excuse. * 

1  See  Underbill,  p.  290;  see  as  to  distribution,  supra,  pp.  117,  119. 

2  Dagley  v.  Tolferry,  1  P.  Wms.  285 ;  Simpson  on  Infants,  p.  180,  2d 
Eng.  ed. 

8  Supra,  p.  51;  Civ.  Code  Cal.  (1885),  §  2238;  Comp.  Laws  Dak. 
(1887),  §  3931 ;  Rev.  Code  N.  Dak.  (1895),  §  4274. 

*  "  Ordinary  care  and  diligence."  Comp.  Laws  Dak.  (1887),  §  3941 ; 
Code  Gfa.  (1895),  §  3170;  Cal.  Civ.  Code  (1885),  §§  2258,  2259. 

6  Hun  V.  Cary,  82  N.  Y.  65.  In  Pierce  i-.  Prescott,  128  Mass.  140, 
a  guardian  was  held  liable  for  not  knowing  the  law  of  distributions. 
C.  J.  Gray  cites  many  other  cases  in  the  opinion. 

8  In  re  Cousins's  Estate,  111  Cal.  441. 

7  Crabb  i-.  Young.  92  N.  Y.  56. 

8  Perrine  v.  Vreeland,  33  N.  J.  Eq.  102. 

»  Stott  V.  Milne,  25  Ch.  D.  710  ;  Boulton  v.  Beard,  3  DeG.,  M.  &  G. 
608  ;  In  re  Westerfield,  32  App.  Div.  (N.  Y.)  324. 


THE  INDIVIDUAL  AS  TRUSTEE.  127 

This  liability  may  be  restricted  by  the  terms  of  the  trust 
instrument ;  and  a  clause  making  a  trustee  liable  for  his 
wilful  and  intentional  breaches  of  trust  only  is  a  com- 
mon provision  in  trust  instruments,  and  will  be  given 
effect  by  the  courts.^  But  this  clause  does  not  excuse 
a  trustee  who  knowingly  or  carelessly  hazards  the  trust 
funds,  and  fails  in  his  duty  where  reasonable  inquiry 
•would  have  made  him  safe.^ 

He  cannot  set  off  the  gain  on  another  investment 
against  the  loss  on  any  injudicious  investment,  since  all 
gains  belong  to  the  trust  fund,  and  the  loss  on  an  improper 
investment  is  a  personal  liability,  and  the  fact  that  the 
trust  fund  has  largely  profited  by  the  good  management 
of  the  trustee  does  not  affect  his  liability  to  make  good 
any  error  of  judgment.^ 

But  if  he  have  a  discretionary  power  to  do  any  act,  the 
court  will  not  inquire  whether  he  has  used  good  judgment 
or  not,  provided  he  has  been  honest  in  its  exercise ;  as, 
for  instance,  if  he  have  a  power  of  sale,  the  court  will  not 
inquire  into  the  price  unless  it  be  so  grossly  inadequate 
as  to  suggest  a  fraud,  or  where  he  has  a  power  to  support, 
the  discretion  of  the  trustee,  honestly  exercised,  as  to  the 
amount  of  support  will  be  final.* 

Measure  of  Damages.  —  A  trustee  who  has  caused  loss 
to  his  trust  must  make  the  fund  good,  and  will  be  charged 
with  interest  if  any  would  have  been  earned. 

Interest  is  simple  in  most  cases,*  but  compound  interest 
is  allowed  if  the  trust  was  for  accumulation,  or  if  the 
funds  have  been  used  in  trade,  as  that  amount  will  be 
supposed  to  be  realized,  or  as  a  punishment  for  disobey- 
ing the  order  of  the  court,  or  wilful  misconduct  in  the 
management  of  the  trust. ^ 

1  Wilkins  v  Hogg,  8  Jnr.  (N.  S.)  25. 

2  Tuttle  V.  Gilmore,  36  N.J.  Eq.  617. 

*  Supra,  p.  122  ;  Wiles  r.  Greeham,  2  Drew.  258. 

*  Supra,  p.  67. 

6  McKim  V.  Blake,  139  Mass.  593. 

«  Ames,  498,  n. ;  McKim  v.  Hibbard,  142  Masii.  422;  Jennison  v. 
Hapgood,  10  Pick.  77;  Bemmerly  v.  Woodward,  124  Cal.  568;  Kane 
V.  Kane's  Adm  ,  146  Mo.  605.     Supra,  p.  93. 


128  A  TRUSTEE'S  HANDBOOK. 

If  the  trustee  fails  to  perform  a  specified  duty,  as,  for 
instance,  to  invest  in  specified  stock,  the  beneficiary  may 
elect  to  have  the  money  and  interest,  or  an  equivalent 
amount  of  stock  and  the  dividends  declared  in  the 
meanwhile.^ 

Similarly,  if  he  exceeds  his  powers  in  selling  real  estate 
or  stocks,  he  may  be  required  to  replace  them  by  like  real 
estate  or  stocks ;  and  if  he  sell  trust  stock  and  have  shares 
in  the  same  company  in  his  own  estate,  they  can  be  held 
by  the  beneficiary  as  against  his  assignee  in  insolvency.'* 

Where  a  trustee  had  sold  the  trust  property  and  appro- 
priated the  proceeds  to  his  own  use,  but  rendered  accounts 
as  though  he  still  held  the  securities,  he  was  charged  with 
the  market  value  of  the  securities  at  the  date  of  the  event, 
and  the  amount  of  dividends  payable  up  to  that  time,  but 
with  an  allowance  for  taxes  and  commissions,  since  the 
settlement  was  on  the  theoi-y  that  the  account  was  made 
up  as  though  the  trust  had  been  properly  administered.' 
Had  the  stock  fallen  in  value,  the  beneficiary  might  have 
claimed  the  price  at  which  it  actually  sold  and  interest.* 
In  the  absence  of  evidence  of  the  actual  price  received,  the 
trustee  is  chargeable  with  at  least  the  inventory  value. ^ 

If  a  trustee  buys  the  trust  property  at  a  sale,  he  must 
make  good  any  loss  in  price  incurred  at  reselling.^  Or  if 
he  sell  to  a  bona  fide  purchaser  before  the  sale  is  disaf- 
firmed, he  must  account  for  any  profit.''  And  if  the  prop- 
erty has  depreciated  in  value,  he  must  make  up  the  differ- 
ence of  the  value  at  the  time  of  purchase,  with  interest. 

If  he  purchased  the  property  himself,  at  an  inadequate 
price,  the  court  may  confirm  the  sale,  requiring  him  to  pay 
the  difference  to  make  the  full  market  value.** 

1  Perry,  §  844 ;  Freeman  v.  Cook,  6  Ired.  Eq.  373 ;  Lewin,  p.  370. 
Infra,  p.  142. 

2  Drapei;  v.  Stone,  71  Me.  175. 

3  McKira  V.  Hibbard,  142  Mass.  422. 

*  Ibid.,  427.  6  ibiJ.,  425. 

6  Davoue  v.  Fanning,  2  Johns.  Ch.  (N.  Y.)  252. 
■?  Claris  0.  Blackington,  110  Mass.  369. 
8  Morse  v.  Hill,  136  Mass.  60. 


THE  INDIVIDUAL  AS  TKUSTEE.  129 

If,  however,  the  trustee,  supposing  that  he  has  acquired 
a  good  title,  has  laid  out  money  in  good  faith,  and  im- 
proved the  estate,  he  will  be  allowed  for  it.^ 

Liability  Terminated.  —  The  liability  of  the  trustee  may 
be  ended  by  his  passing  through  insolvency,*^  or  getting 
a  release,^  settling  his  accounts,*  or  by  the  statute  of 
limitations.^ 

If  his  successor  in  the  trust  takes  over  the  property  with- 
out objection  at  its  inventory  valuation,  and  retains  it  for 
a  considerable  time  unconverted,  he  cannot  subsequently 
charge  his  predecessor  with  any  loss.^  If,  however,  the 
successor  seasonably  converts  the  property,  he  may  claim 
the  loss,  or  he  can  object  to  taking  the  property  at  more 
than  its  real  value. ^ 

He  is  not  liable  for  the  doings  in  the  trust  subsequent 
to  his  death,  but  an  action  against  him  for  a  breach  of 
trust  survives  in  equity.^ 

The  ordinary  statute  limiting  the  time  for  the  collection 
of  a  debt  to  two  years  after  the  death  of  the  debtor  does 
not  apply  to  the  collection  of  trust  funds  from  the  estate 
of  a  trustee,  even  though  the  trustee  so  mingled  the  trust 
funds  with  his  own  that  they  cannot  be  traced,  for  he 
cannot  convert  himself  from  a  trustee  into  a  debtor  with- 
out the  beneficiaries'  consent,*  and  the  statute  is  against 
debtors  only.' 

1  Morse  v.  Hill,  136  Mass.  60.  Also  Davone  v.  Fanning,  2  Johns. 
Ch.  (N.  Y.)  252. 

a  Thompson  v.  Finch,  8  DeG.,  M.  &  G.  560. 

»  Infra,  p.  147. 

♦  Supra,  pp.  118,  119;  infra,  p.  149. 

6  Thayer  v.  Kinsey,  162  Mass.  232. 

«  In  re  Salmon,  42  Ch.  Div.  351 ;  Thayer  v.  Kinsey,  162  Mass.  232. 

^  Dodd  V.  Wilkinson,  41  N.  J.  Eq.  566. 

»  Supra,  p.  121. 

>  Ganter  t;.  Janes,  9  Cal.  643,  p.  659  et  »<q. 

0 


PART  m. 

THE  BENEFICIARY. 

I.  WTio  may  be  a  Beneficiary.  —  Almost  any  person 
may  be  a  beneficiary,  but  a  person  who  could  not  legally 
hold  property  within  the  jurisdiction  cannot  be  entitled  as 
a  beneficiar}'.  As,  for  instance,  a  slave, ^  an  alien  enemy 
or  a  corporation^  that  could  not  hold  propertj'  in  its  own 
name  in  the  jurisdiction,  could  not  hold  it  through  the 
instrumentality  of  a  trustee.' 

Parrots,  horses,  and  dogs,  and  in  former  times  slaves, 
might  be  the  objects  of  trusts,  but  thej-  could  not  be  true 
beneficiaries,  as  they  are  not  "persons,"  and  therefore 
•cannot  appear  in  court  to  enforce  the  trust.  Bequests  to 
'Unspecified  charities  stand  on  another  footing,  since  the 
Attorney  General  will   appear  to  enforce  them. 

Trusts  for  "things,"  such  as  pets,  etc.,  if  properly  drawn, 
•will  not  be  interfered  with  by  the  court,  but  the  carrying 
•of  them  out  must  depend  on  the  honor  of  the  trustee.  That 
is  to  sa}',  the  gift  may  be  to  a  trustee  to  expend  so  much 
as  he  thinks  fit  in  maintaining  certain  horses  and  dogs,  the 
residue  to  go  to  the  trustee.  A  further  clause  might  be 
added,  that,  if  the  trustee  failed  to  support  the  animals 
properly,  the  property  should  go  to  the  next  of  kin.     So, 

i  Pool  V.  Harrison.  18  Ala.  514. 

«  Coleman  r.  Railroad  Co.  49  Cal.  .517. 

8  Tot  statutes  against  aliens  holding  land  in  sundry  States,  see 
TJnderhill,  p.  9.5,  n. 

*  But  see  Fosdick  v.  Town  of  Hempstead,  125  N.  Y.  581,  where  the 
:poor  of  a  town  was  considered  too  indefinite. 


THE  BENEFICIARY.  131 

too,  the  direction  to  employ  a  particular  person  as  an  at- 
tornej'  or  agent  by  a  testator  does  not  create  a  trust  or 
make  the  person  designated  a  beneficiary.^ 

"Who  ia  the  Benefici2u-y  ?  —  Any  person  who  has  a  claim 
against  the  trustee  for  any  of  the  benefit  of  the  trust  prop- 
erty is  a  beneficiarj'. 

The  claim  need  not  be  vested,  a  contingent  interest  being 
such  a  claim.^ 

Persons  to  whom  income  is  payable  at  the  discretion 
of  the  trustee  are  not  beneficiaries  under  the  above  defini- 
tion, since  they  have  no  claim  they  can  enforce  or  assign, 
although  they  are  interested  in  the  trust  and  may  intervene 
to  have  a  proper  trustee.' 

In  the  absence  of  statute  ordering  the  appointment  of  a 
guardian  ad  litem,  persons  not  ascertained  or  not  in  being 
are  not  parties  interested.* 

Persons  having  a  mere  possibilit}',  or  a  person  to  whom 
a  beneficiary  has  given  an  order  on  the  trustee,  are  not 
beneficiaries,  although  they  have  propert}'  that  may  be 
assigned.®  Nor  is  the  holder  of  a  general  power  of  ap- 
pointment a  beneficiar}',  although  if  he  exercise  the  power 
his  creditors  will  take  the  estate. 

The  claim  of  the  beneficiary  is  not  to  any  part  of  the 
property  itself,  either  in  law  or  equity ;  hence  he  cannot 
sue  to  recover,  and  protect  the  fund  or  recover  damages 
for  an  injury  to  it.'  All  the  property*  rights  are  in  the 
trustee,  and  the  claim  is  against  the  trustee  onl}'.'' 

1  Foster  v.  Elsley,  19  Ch.  Div.  518. 

2  Clarke  v.  Deveanx,  1  S.  C.  172. 

«  Wilaon  v.  Wilson,  145  Mass.  490.  Supra,  pp.  8  and  66;  infra, 
p.  135. 

♦  Bradstreet  v.  Butterfield,  129  Mass.  339;  Hartman's  Appeal,  90 
Pa.  St.  203;  Dexter  v.  Cotting,  149  Maes.  92. 

6  Hawley  v.  Ross,  7  Paige,  103. 

6  Western  Railroad  Co.  v.  Nolan,  48  N.  Y.  513.  Statutes  in  Code 
States  and  several  others. 

'  Supra,  p.  22. 


132  A  trustee's  handbook. 

II.  Estate  of  tte  Beneficiary.  —  The  estate  of  the  bene- 
ficiary may  be  described  as  his  right  to  force  the  trustee 
to  carry  out  the  terms  of  the  trust.  As  courts  of  equity 
recognize  the  beneficiary's  absolute  right  in  this  respect, 
they  regard  him  as  the  true  owner  of  the  property,  and 
have  invested  his  equitable  estate  with  many  of  the  same 
incidents  and  qualities  pertaining  to  legal  ownership  in  a 
court  of  law.^ 

As  has  been  hereinbefore  pointed  out,*^  the  beneficiarj'  is 
not  clothed  with  the  privileges  and  burdens  incidental  to 
the  ownership  of  the  property,  which  are  attributes  of  the 
legal  estate  and  consequently  belong  to  the  trustee  ;  but  his 
equitable  estate  is  property,  and  he  may  treat  it  in  general 
much  as  the  legal  owner  of  property  may  treat  his,  although 
it  is  not  such  an  ownership  of  things  as  would,  for  instance, 
qualify  a  voter  where  a  property  qualification  is  required.* 

Incidents  of  the  Equitable  Estate.  —  The  estate  of  the 
beneficiaries  is  not  joint,  even  though  there  be  several  ben- 
eficiaries entitled  to  equal  and  similar  interests  in  the  trust.* 
Each  beneficiary  may  act  independently  of  the  others,  and 
the  admissions  of  one  will  not  estop  the  others,  (a)  A 
majority  has  no  greater  right  than  a  minority,  or  than 
even  an  individual. 

"Where,  however,  there  has  been  a  breach  of  trust  in  the 
sale  of  trust  property,  and  the  beneficiaries  do  not  agree 
in  desiring  a  reconveyance,  if  their  interests  cannot  be 
separated  the  court  will  proceed  in  the  best  interests  of  all 
the  beneficiaries  and  order  an  avoidance  for  all,  or  damages 
for  all,  as  it  thinks  best.^ 

Or  where  an  account  is  corrected  at  the  instance  of 
one,  all  will  be  entitled  to  participate  in  the  benefit  of 
the  correction.* 

1  Freedman's  Co.  l\  Earle,  110  U.  S.  710. 

2  Supra,  p.  23 ;  and  see  Lewin,  p.  640. 

8  Lewin,  p.  24";  Burgess  v.  Wheate,  1  Eden,  177,251. 

*  Underbill,  p.  463.  ^  Morse  v.  Hill,  136  Mass.  6a 

«  Little  V.  Little,  161  Maes.  189. 

(o)  Levi  V.  Gardner,  53  So.  Car.  24. 


THE  BENEFICIAEY.  133 

The  equitable  estate  may  descend  or  be  devised,  and  is 
now  usuallj-  liable  to  the  incidents  of  curtes}'  and  dower.^ 

That  curtes}'  may  attach,  the  estate  must  be  in  pos- 
session, when  it  will  attach  although  limited  to  the  wife's 
heirs." 

In  earl}'  times  dower  was  not  an  incident  of  a  trust 
estate,"  but  now,  by  statute,  it  usually  is,*  although  there 
are  some  jurisdictions  where  there  is  no  dower,  as  Massa- 
chusetts and  Maine,  but  the  wife  is  compensated  in  other 
ways.® 

Beneficial  estates  in  lands  have  been  held  not  liable  to 
forfeiture  or  escheat,'  but  under  the  statutes  in  the 
United  States  on  failure  of  heirs  the  trust  property,  whether 
real  or  personal,  would  pass  to  the  State. '^ 

The  beneficial  estate  is  subject  to  disseisin  where  a 
trustee  repudiates  the  trust,  and  claims  the  property  so 
that  the  statute  of  limitations  begins  to  run.^ 

Alienation.  —  In  the  absence  of  restraint  by  the  terms 
of  the  settlement  or  statute,  the  beneficial  estate  may  be 
alienated  as  freel}'  as  any  other  propcrt}'.' 

The  beneficiary  may  convej'  it  away  and  it  will  pass  to 
his  assignee  under  a  general  assignment.^**    He  may  dis- 

1  Annot.  Code  Miss.  (1892),  §  1546;  Laws  of  Del.  (1893),  ch.  85, 
§  1  ;  Rev.  Stat.  N.  Y.  (1896),  p.  1827,  §  21;  Bartlett  v.  Bartlett,,  137 
Mass.  156;  Perry,  §323. 

2  Tillinghast  v.  Coggeshall,  7  R.  I.  383. 
«  Reed  o.  Whitney,  7  Gray,  533. 

*  See  Stimpson,  §  3202. 

'  Hamlin  v.  Hamlin,  19  Me.  141 ;  Reed  v.  Whitney,  7  Gray,  533. 

«  Burgess  v.  Wheate,  1  W.  Bl.  123. 

'  Perry,  §§  327,  436. 

8  Infra,  p.  149, 

'  In  Ga.  Code  (1895),  §  3188,  may  sell  to  any  person  except  husband 
and  trustee.  In  Pennsylvania  and  South  Carolina  a  married  woman 
can  convey  only  in  the  manner  provided  in  the  settlement.  Quin's  Es- 
tate, 144  Pa.  444;  Dunn  v.  Dunn,  1  So.  Car.  350;  Gray,  Restraints  on 
Alienation,  2d  edit.,  §  275  b. 

w  Forbes  r.  Lothrop,  137  Mass.  523. 


13-1  A  trustee's  handbook. 

pose  of  it  by  will,  and  it  may  be  taken  by  liis  creditors  for 
his  debts,  the  luauuer  in  wiiicli  it  is  readied  vaiyiug 
according  to  local  law  ;  ^  but  there  is  some  way  of  reaching 
it  everywhere. 

Alienation,  What  Estate  passes.  —  The  beneficiary,  un- 
like the  owner,  has  no  property  to  alien.  All  he  has  are 
liis  rights,  or,  as  they  are  called,  his  equity,  (a) 

This  equity  or  claim  against  the  trustee  is  subject  to  all 
the  counter  claims  of  the  trustees. 

Thus,  if  the  beneficiary  was  indebted  to  the  trustee,  his 
equity  will  pass  to  his  transferee  subject  to  the  trustee's 
counter  claim,  but  not  if  it  be  in  autre  droit.'^  Or  if  the 
beneficiary,  being  also  a  defaulting  trustee,  assigns,  his 
assignee  will  take  subject  to  making  good  the  default.^ 

It  follows  from  the  nature  of  the  estate,  being  a  claim 
instead  of  property-,  that  the  assignor  can  only  transfer 
what  rights  he  has,  and  the  assignees  accordingly  take  in 
the  order  of  their  assignments,  and  a  purchaser  for  value 
gets  no  better  title  than  a  volunteer.*  If  however  a  later 
assignee  acting  in  good  faith  fortifies  liis  equity  by  a  legal 
right,  such  as  payment  of  the  claim, ^  a  judgment,**  or  a 
new  obligation  from  the  trustee  to  him  direct,  he  may  hold 
the  property  both  in  law  and  equity.^ 

In  all  jurisdictions  the  assignment  of  an  equity  in  real 
estate  is    complete   when   assignor    and   assignee    have 

1  Gray,  Restraints  on  Alienation,  2d  edit.,  §§  170-174.  On  execu- 
tion, Hadden  v.  Spader,  20  Johns.  5.54.  By  creditor's  bill  for  equitable 
execution,  Drake  v.  Rice,  130  Mass.  410;  Chase  v.  Searls,  45  N.  H.  511. 

2  Infra,  p.  154.  As  for  instance  where  the  counter  claim  is  indi- 
vidual. Abbott  r.  Foote,  146  Mass.  333;  Dodd  v.  Winship,  133  Mass. 
359 ;  e.  g.,  a  professional  fee.    Harris  v.  Elliott,  24  App.  Div.  (N.  Y.)  13a 

8  Belknap  v.  Belknap,  5  Allen,  468. 

4  Philips  V.  Philips,  4  DeG.,  F.  &  J.  208. 

6  N.  Y.  Co.  V.  Schuyler,  34  N.  Y.  30  ;  Bridge?;.  Conn.  Life  Ins.  Co., 
152  Mass.  343. 

6  Judson  V.  Corcoran,  17  How.  612.  ''  Ames,  328. 

(a)  Thus  he  cannot  have  his  assignment  of  his  interest  noted  against 
a  trust  mortgage  in  the  registry  of  deeds,  as  it  might  cloud  the  legal 
title  of  the  trustee.    Cheyuey  v.  Geary,  194  Pa,  St.  427. 


THE  BENEFICIAEY.  136 

assented  ;  ^  and  the  same  rule  is  true  of  personal  propert}' 
in  Massachusetts,  New  York,  Minnesota,  Indiana,  and 
West  Virginia,^  but  in  other  jurisdictions  notice  to  the 
trustee  is  necessary  to  complete  the  assignment  of  an 
equit}'  in  personal  property.' 

Notice  to  be  good  must  be  given  to  the  trustee  after  his 
appointment,*  and  notice  to  one  of  several  trustees  or 
other  joint  obligors  is  notice  to  all/ 

Knowledge  is  notice,  if  obtained  in  such  a  manner  as 
would  affect  a  reasonable  man  ;  but  if  tlie  assignor  is  the 
trustee  his  knowledge  is  not  notice,  but  if  he  be  assignee 
knowledge  is  notice.^ 

Accordingly,  in  those  jurisdictions  whei'e  notice  is  neces- 
sary to  complete  the  transaction,  the  person  giving  notice 
first  will  have  priorit}' ;  but  if  the  person  giving  the  notice 
was  aware  of  the  previous  assignment,  his  notice  will  not 
help  him. 

A  person  who  has  a  general  power  of  appointment  and 
exercises  it,''  makes  the  property  assets  of  his  estate  for 
creditors,  since  he  should  have  appointed  to  them  instead 
of  to  volunteers.  If  the  power  of  appointment  be  special, 
the  creditors  could  not  take  unless  the  settlor  and  the 
donee  of  the  power  were  the  same,®  in  which  case  qumref* 
But  a  person  to  whom  income  is  payable  at  the  pleasure 
of  the  trustee  has  no  estate  that  can  be  assigned  or  taken 

1  Lee  V.  Hewlett,  2  Kay  &  J.  531. 

2  Thayer  v.  Daniels,  113  Mass.  129 ;  White  v.  Wiley,  U  Ind.  496; 
McDonald  v.  Kneelaud,  5  Minn.  352 ;  Clarke  v.  Hogeman,  13  W.  Va. 
718  ;  Fairbanks  v.  Sargent,  104  N.  Y.  108. 

«  Foster  v.  Cockrell,  3  CI.   &  Fin.  456;  Wallston  v.  Braswell, 
1  Jones  Eq.  137 ;  Copeland  i'.  Manton,  22  Ohio  St.  398. 
*  Roxbnrghe  v.  Cox,  17  Ch.  D.  520,  527. 
»  Perry,  §  438,  end. 
«  Ames,  328,  n. ;  Lloyd  u.  Banks,  3  Ch.  488. 

7  Clapp  V.  Ingraham,  126  Mass.  200.    Supra,  p  20. 

8  Bailey  v.  Lloyd,  5  Russ.  330 ;  Cowx  v.  Foster,  1  Johns.  &  Hem.  30. 

'  The  policy  of  the  law  is  well  set  forth  by  Morton,  C.  J.,  in  Pa- 
cific Bank  o.  Wiudram,  133  Maas.  175-177.  There  is  a  lack  of  direct 
decisions. 


136  A  trustee's  handbook. 

for  his  debts,  as  his  assignees  or  creditors  must  take 
through  him  and  he  has  no  rights  tliat  he  can  enforce.^  In 
some  States  the  creditors  have  lien  by  statute  even  where 
the  power  is  not  exercised. 

Restraint  on  Alienation.  —  One  of  the  ordinary  motives 
for  giving  property  in  trust,  instead  of  giving  it  outright, 
is  the  desire  of  donors  to  secure  to  the  beneficiaries  the 
enjoyment  of  its  benefits  irrespective  of  their  improvidence 
or  extravagance. 

In  such  cases  it  is  usual  to  insert  a  provision  in  the  trust 
instrument  that  the  beneficiary  shall  not  take  his  income 
b}'  way  of  anticipation,  and  that  it  and  the  principal  shall 
not  be  assigned,  or  be  liable  to  be  taken  for  his  debts. ^ 

As  a  general  rule  in  America,  such  a  restraint  on  the 
alienation  of  the  income  is  valid,  but  is  invalid  as  regards 
the  principal  fund,'  while  in  England  and  in  other  States 
(there  being  several  where  the  question  is  not  determined) 
such  a  restriction  is  inoperative  except  in  the  case  of  a  ben- 
eficiary who  is  a  married  woman,*  who  is  excepted  ever}*- 
where  except  in  Massachusetts,  Pennsylvania,  and  Mary- 
land, where  she  cannot  settle  property  on  herself  without 
power  of  alienation  during  coverture.^ 

This  restraint  in  the  case  of  a  mariied  woman  cannot 
be  removed  by  any  one,  not  even  bj^  the  court,"  and  can- 
not be  set  aside  to  relieve  against  her  fraud  or  breach  of 
trust,''  nor  will  acquiescence  by  the  married  woman  excuse 
a  trustee  for  disregarding  it.* 

1  Infra,  p.  138. 

2  See  supra,  p.  66.  The  decisions  on  this  subject,  and  the  policy 
involved,  are  thoroughly  discussed  in  Restraints  on  the  Alienation  of 
Property,  by  John  Chipman  Gray,  LL.D.,  2d  ed.,  189.5. 

8  Gray,  Restraints  on  Alienation,  2d  ed.,  §  167  j. 

*  Ibid.,  §§  134-213,  268,  268  b. 

6  Ibid.,  §§  269-277  a.  See  note  to  Underbill,  p.  377 ;  Pacific  Bank 
V.  Windram,  133  Mass.  175;  Jackson  v.  Von  Zedlitz,  136  Mass.  342; 
Brown  v.  Macgill,  87  Md.  161. 

8  Robinson  v.  Wheelwright,  21  Beav.  214. 

''  Stanley  v.  Stanley,  7  Ch.  D.  589. 

8  Gray,  Restraints  on  Alienation,  2d  ed.,  §  271 ;  Fletcher  v.  Greene, 
33  Beav.  426. 


THE   BENEFICLA.RY.  137 

In  most  States  the  restraint  on  alienation  can  be  made 
only  by  the  terms  of  the  trust  instrument.  There  are 
some  States,^  notably  those  having  codes,  where  such 
restraint  is  provided  for  by  statute. 

In  Pennsylvania,^  Massachusetts,^  Illinois,^  Maine, ^ 
Maryland,®  Mississippi,''  Missouri,^  Texas,  (a)  and  probably 
Tennessee,^  Delaware,^"  Indiana,"  and  Virginia,^^  and  in 
the  Federal  courts  ^^  and  Vermont,^*  the  settlor  may  settle 
the  life  estate  without  power  of  alienation  on  any  one  but 
himself  as  beneficiary,  and  it  cannot  be  taken  for  his  debts." 
Such  restraints  are  adjudged  bad  ^®  in  Rhode  Island," 
New  York  (aside  from  statute^*).  North  Carolina,^®  South 
Carolina,^"  Georgia,^^  Alabama,^*^  Ohio,'^  Kentucky,^*  and 

1  Civ,  Code  California  (1885),  §  867  ;  Comp.  Laws  Dakota  (1887), 
§  2808. 

2  Overman's  Appeal,  88  Pa.  276. 

8  Broadway  Bank  v.  Adams,  133  Mass.  170. 

*  Steib  j;.  Whitehead,  111  111.  247. 

6  Roberts  v.  Stevens,  84  Me.  325. 

8  Smith  V.  Towers,  69  Md.  77 ;  Brown  v.  Macgill,  8,7  Md.  161. 

^  Leigh  V.  Harrison,  69  Miss.  923. 

8  Lampert  v.  Haydel,  20  Mo.  App.  616. 

9  Tenn.  Code  (1896),  §§  6091-6093;  Jourolman  v.  Massengill,  86 
Tenn.  81. 

i«  Gray  v.  Corbit,  4  Del.  Ch.  135. 
"  Thompson  v.  Murphy,  37  N.  E.  Rep.  1094. 
12  Garland  v.  Garland,  87  Va.  758. 

i«  Nichols  V.  Eaton,  91  U.  S.  716.  "  Barnes  v.  Dow,  59  Vt.  530. 

^  Gray,  Restraints  on  Alienation,  2d  ed.,  §§  177  a,  240  h  to  249  6; 
also  p.  281. 
18  Gray,  Restraints  on  Alienation,  2d  ed.,  §  178. 
"  Tillinghast  v.  Bradford,  5  R.  I.  205. 

18  Rome  Exch.  Bk.  v.  Eames,  4  Abb.  Ct.  App.  83,  but  changed  by 
statute.  See  note  4,  p.  138,  infra.  In  voluntary  settlement  on  self 
income  can  be  reached  by  creditor  in  spite  of  statute.  Schenck  v. 
Barnes,  156  N.  Y.  316. 

19  Pace  V.  Pace,  73  N.  C  119. 

2»  Heath  v.  Bishop,  4  Rich.  Eq.  46. 

21  Bailie  v.  McWhorter,  56  Ga.  183. 

22  Robertson  v.  Johnston,  36  Ala.  197. 

2«  Hobbsr.  Smith,  15  Ohio  St.  419.      24  Knefler  ».  Shreve,  78  Ky.  297 
(a)  Monday  v.  Vance,  92  Tex.  428. 


188  A  trustee's  haxdbook. 

probably  in  Arkansas  ;  ^  in  Connecticut  the  dicta  are  con- 
flicting, and  there  are  no  decisions.'^ 

Under  the  statutory  provisions  of  New  York,*  New 
Jersey,  Indiana,  Michigan,  Wisconsin,  Minnesota,  Kansas, 
California,  and  North  and  South  Dakota,  the  beneficiary 
may  be  restrained  from  alienating  the  rents  and  profits, 
but  not  the  gross  sum.* 

In  Arizona  ^  he  may  settle  on  his  children  without 
power  of  alienation,  and  in  North  Carolina  ®  it  maj-  be 
so  settled  on  a  relative,  if  at  the  creation  of  the  trust  his 
debts  do  not  exceed  five  hundred  dollars. 

Although  there  are  jurisdictions,  as  appears  above,  where 
a  restraint  on  alienation  cannot  be  successfully  attached 
to  a  settlement  where  the  gift  is  absolute  to  the  benefi- 
ciar}-,  yet  the  same  result  is  practically  reached  by  what  is 
commonl}' known  as  a  spendthrift  trust;  that  is  to  sa}',  by 
leaving  it  to  the  pleasure  of  the  trustees  whether  they  will 
use  the  trust  fund  for  the  beneficiary,  (a)  or  as  more  com- 
monly provided,  pay  the  income  to  the  beneficiary,  use  a 
part  of  it  for  his  support,  or  accumulate  so  much  as  they 
think  fit.  In  such  a  case,  the  creditors  of  the  beneficiary 
cannot  take  the  income,  because  the  beneficiary  has  no 
right  to  any  specific  income  which  he  can  enforce,''  and 
therefore  nothing  that  he  can  alien,  or  that  can  be  taken  for 
his  debts  ;  but  in  such  cases,  if  the  beneficiary  is  also  trus- 
tee, the  estate  vests  in  him  absolutely,  and  no  spendthrift 
trust  is  established.  ^    But  in  England,  and  in  those  States 

1  Lindsay  v.  Harrison,  8  Ark.  302. 

2  Gray,  Restraints  on  Alienation,  2d  ed.,  §  195. 

8  Cochrane  i>.  Schell,  140  N.  Y.  516.     See  note  18  preceding  page. 

*  Rev.  Stat.  N.  Y.  (1896),  p.  1798,  §  63;  N.  J.  Pub.  Laws  (1880), 
p.  274  ;  Annot.  Stat.  Mich.  (1882).  §  5581  ;  Stat.  Minn.  (1894),  §  4292 ; 
Rev.  Code  N.  D.  (1895),  §  3398  ;  Gen.  Stat.  Kan.  (1897),  eh.  113,  §  4  ; 
Civ.  Code  Cal.  (1885),  §§  857,  859,  867;  Comp.  Laws  Dak.  (1887), 
§§  2798,  2800,  2808  ;  Annot.  Stat.  Wise.  (1889),  §  2089;  Rev.  Stat.Ind. 
(1894),  §  3394  ;  Gray,  §  296. 

6  Rev.  Stat.  Ariz.  (1887),  §  .3252.        «  N.  C.  Code  (1883),  §  1335. 

7  In  re  Bullock  ;  Good  i;.  Lickorish,  60  L.  J.  Ch.  341. 

8  Hahn  v.  Hutchinson,  159  Pa.  St.  133. 

(a)  Huntington  v.  Jones,  43  Atl.  Rep.  564  (Conn.  1899). 


THE  BENEFICIARY.  189 

following  the  English  rule,  the  trustee  must  account  to  the 
creditor  for  any  income  which  he  pays  to  or  expends  for 
the  hcneficiarj-  after  notice  of  his  assignment/  although  if 
he  pays  or  expends  it  for  others  the  creditor  has  no  claim. 
If,  however,  the  provision  be  to  pa}'  all  the  income  to  him 
or  apply  it  all  to  his  support,  he  has  an  absolute  right 
which  he  can  alien  or  which  can  be  taken. 

If  the  provision  be  to  pa}'  him  or  support  his  family,  in 
most  jurisdictions  none  of  the  income  can  be  taken,  (a)  but 
in  others,  notably  where  the  matter  is  regulated  by  statute, 
so  much  as  is  left  after  reasonable  support  ma}'^  be  taken 
or  alienated,^  and  this  amount  is  sometimes  fixed  by  the 
statute ;  but  the  statutes  only  protect  the  creditor,  and 
give  no  power  of  voluntary'  alienation  to  the  beneficiary.' 

The  settlor  may  attach  a  condition  to  the  gift  of  income, 
that  if  it  be  alienated,  or  if  the  beneficiary  become  bank- 
rupt, the  income  shall  pass  to  others,*  and  this  condition 
will  be  valid  in  any  case,  even  though  the  person  to  whom 
the  income  passes  is  the  wife  of  the  original  beneficiary," 
except  only  where  the  income  is  settled  on  the  settlor 
himself;  ^  but  this  exception  does  not  apply  to  a  married 
woman  under  coverture,'  except  in  Pennsylvania,  Mary- 
land, and  Massachusetts,  where  married  women  have  the 
same  status  as  other  individuals.^ 

^  Gray,  Restraints  on  Alienation,  2d  ed.,  §  167  g;  Re  Coleman,  39 
Ch.  D.  443. 

2  For  the  statates,  see  Stimpson,  Statute  Law,  p.  237 ;  Gray,  Re- 
straints on  Alienation,  2d  ed.,  §  296.     Sujira,  p.  138,  note  4. 

8  Gray,  Restraints  on  Alienation,  2d  ed.,  §  292;  Ames,  401,  n. ; 
Tolles  V.  Wood,  99  N.  Y.  610  ;  but  in  Illinoi.s  the  statute  curiously  cuts 
out  the  creditor,  and  allows  the  beneficiary  to  alienate ;  Potter  v. 
Couch,  141  U.  S.  296. 

*  Re  Levy's  Trust,  30  Ch.  D.  119  ;  Nichols  v.  Eaton,  91  U.  S.  716. 

^  Samu6l  v.  Samuel,  12  Ch.  D.  152;  Gray,  Restraints  on  Alienation, 
2d  ed.,  §  46. 

6  .Jackson  v.  Von  Zedlitz,  136  Mass.  342. 

T  Clive  V.  Carew,  1  Johns.  &  Hem.  199.  «  See  supra,  p.  136. 

(«)  Seymour  v.  McAvoy,  121  Cal.  438.  A  court  of  equity  cannot 
determine  how  much  income  is  required  for  support  of  beneficiary  and 
family,  therefore  there  is  no  surplus  for  a  creditor.  First  National 
Bank  v.  Mortimer,  60  N.  Y.  S.  47. 


140  A  TRUSTEE'S  HANDBOOK. 

A  similar  condition  attached  to  a  gift  of  the  principal 
of  the  fund  is  valid  so  long  as  the  estate  remains  contin- 
gent, but  if  the  estate  vests,  then  the  gift  over  becomes 
void.^ 

A  provision  attached  to  a  gift  that  so  much  as  shall  not 
be  used  or  alienated  shall  go  to  another  is  void.*^ 

A  limitation  of  the  income  to  the  sole  and  separate  use 
of  a  married  woman,  is  not  a  restraint  on  alienation." 

III.  Rights  against  Trustee.  —  As  the  whole  estate  of 
the  beneficiary  consists  of  his  right  to  compel  the  trustee 
to  cany  out  the  trust,  he  is  considered  to  be  peculiarly 
under  the  care  of  the  court. 

"Where  Enforced.  —  The  beneficiary  may  have  a  sub- 
poena against  the  trustee  wherever  he  can  find  him,* 
irrespective  of  the  situation  of  the  trust  propert}',®  unless 
the  trust  be  created  by  the  decree  of  a  court  of  another 
State,  in  which  case  the  trustee  can  onl}'  be  sued  there, 
unless  ancillary  trusteeship  be  also  taken  out  in  the  ju- 
risdiction where  suit  is  brought.®  And  where  the  trust 
is  established  by  the  decree  of  a  court  of  one  State,  the 
courts  of  that  State  have  jurisdiction  to  regulate  the  trust, 
although  both  the  trustee  and  beneficiary  are  out  of  the 
jurisdiction,  since  they  can  remove  the  trustee  and  appoint 
one  to  act  in  his  place.''  So  also,  if  the  trustee  is  not 
within  the  jurisdiction,  but  the  trust  property  is  within 
the  jurisdiction  of  the  court,  and  there  is  a  statute  vesting 
the  property'  in  a  trustee  appointed  by  the  court,*  then  the 

1  Mandlebaam  v.  McDonell,  29  Mich.  78.  A  trustee  having  discre- 
tion to  spend  part  of  principal  for  the  beneficiary  cannot  be  compelled 
to  pay  his  debts.     Huntington  v.  Jones, 43  Atl.  Rep.  564  (Conn.  1899). 

2  Foster  v.  Smith,  156  Mass.  379  ;  Fisher  v.  Wister,  154  Pa.  St.  65; 
Gray,  Restraints  on  Alienation,  2d  ed.,  §§  57-74. 

8  Forbes  v.  Lothrop,  137  Mass.  523. 

*  Brown  v.  Desmond,  100  Mass.  267 ;  Kildare  v.  Eustace,  1  Vernon, 
405;  Cooley  v.  Scarlett,  38  111.  316. 

6  Massie  v.  Watts,  6  Cranch,  148,  160;  Marshall,  C.  J. 
«  Jenkins  v.  Lester,  131  Ma.ss.  355.     Infra,  p.  155 
'  Cha.'se  V.  Chase,  2  Allen,  101  ;  Curtis  v.  Smith,  60  Barb.  9. 
o  Felch  V.  Hooper,  119  Mass.  52. 


THE  BENE^'ICIARY.  141 

court  can  appoint  a  trustee  to  execute  the  trusts.  If, 
however,  there  is  no  statute  to  transfer  the  title  to  the 
property,  the  court  is  powerless,  unless  it  have  jurisdiction 
over  the  trustee  in  whom  the  title  is  vested.^ 

If  the  trust  is  illegal  in  the  jurisdiction  where  it  is  sought 
to  be  enforced,  the  trustees  will  hold  the  property  on  a  re- 
sulting trust  for  the  heirs. ^ 

The  beneficiarj'  is  entitled  to  have  proper  persons  and  a 
proper  number  of  trustees,  and  any  person  interested  in 
the  trust,  even  though  the  interest  is  contingent  on  the 
mere  possibility  of  receiving  a  pajment  at  the  discretion 
of  the  trustee,  may  applj'  to  the  court  in  the  matter  of 
removing  or  appointing  a  trustee.* 

Can  Compel  "What.  —  The  beneficiar}'  can  compel  the 
trustee  to  perform  his  duties,  and  if  the  trustee  refuses  to 
sue  or  defend,  the  benefieiarj'  ma}'  sue  or  defend  in  the 
trustee's  name  by  getting  leave  of  court  to  do  so ;  (a)  but 
the  trustee  must  be  shown  to  be  in  default,*  and  indemni- 
fied for  costs.® 

The  beneficiary  has  no  right  to  advise  or  direct  his 
trustee  unless  the  right  be  expressly  conferred  by  the  trust 
instrument,  and  if  his  advice  be  asked  and  followed,  he 
may  lose  his  remedy  against  the  trustee  should  the  ac- 
tion be  injudicious ;  therefore,  on  the  whole,  it  is  better 
to  leave  the  full  responsibility  on  the  trustee,  where  it 
belongs.' 

If  an  express  power  be  given  by  the  trust  instrument,  it 
is  governed  by  the  general  rules  applicable  to  such  powers. 

He  can  have  the  trustee  enjoined  from  committing  a 

1  McCann  v.  Randall,  147  Mass.  81.    See  supra,  p.  8,  and  infra,  p.  155. 

*  Hawley  v.  James,  7  Paige,  213. 

*  Supra,  pp.  6  and  8. 

*  Morgan  v.  Kansas  Pacific  Railroad,  21  Blatch.  134;  Thompson  v. 
Remsen,  58  N.  Y.  S.  424.  ^  Ins.  Co.  v.  Smith,  11  Pa.  St.  120. 

«  Bradby  v.  Whitchurch,  W.  N.  1868,  p.  81  ;  Life  Ass'n  Scotland  v. 
Siddel,  3  DeG.,  F.  &  J.  58,  74. 

(a)  In  some  recent  cases  the  beneficiary  has  been  allowed  to  sue  in  his 
own  name,  where  he  had  a  right  to  use  the  trustee's  name.  Anderson  v, 
Daley,  38  App.  D.  (N.  Y.)  505 ;  Zimmerman  i*.  Makepeace,  152  lud.  199. 


142  A  trustee's  handbook. 

contemplated  breach  of  trust,  or  voting  against  his  wishes 
if  it  would  cause  him  irreparable  injur}'.^ 

He  may  have  a  receiver  appointed  to  hold  the  property 
if  it  is  imperilled  by  remaining  in  the  hands  of  the  trustee, 
and  pending  his  removal  and  the  appointment  of  a  new 
trustee.^ 

In  England  he  maj'  have  the  estate  administered  by  the 
court,  but  such  receivership  suits  are  not  in  vogue  in  this 
country  in  trust  estates.^ 

If  the  trustee  commits  a  breach  of  trust,  the  benefi- 
ciarj-  maj'  either  sue  in  equity  for  his  damage  or  loss,  or 
in  testamentary  trusts  may  sue  on  the  bond  given  to  the 
court. 

If  the  trustee  has  been  guilty  of  a  breach  of  trust  in  in- 
vesting or  using  the  funds  of  the  trust,  the  beneficiary 
ma}'  elect  whether  he  will  take  the  property  into  which 
the  funds  have  been  converted,  or  the  amount  taken  with 
interest.*  But  he  must  choose,  and  cannot  pursue  both 
remedies  ;  ®  and  if  he  disaffirms  a  sale,  he  must  return  the 
consideration  in  absence  of  fraud.*  If  he  follows  the  prop- 
erty" and  it  is  insufficient,  he  ma}*  prove  his  claim  for  bal- 
ance ;  but  if  the  beneficiaries  are  not  agreed,  the  court 
will  order  whichever  remed}'  it  thinks  best  under  the  cir- 
cumstances.'' 

In  general,  the  damage  recoverable  is  the  amount  of 
the  loss  for  the  remainderman,  with  simple  interest  for  the 
life  tenant ;  but  compound  interest  is  allowed  when  the  in- 
come was  to  be  added  to  the  principal  periodically,  or 

1  Ames,  276,  n.  2. 

2  Jones  V.  Dougherty,  10  Ga.  273..    Supra,  p.  6. 
8  Underbill,  pp.  366  and  440. 

*  Supra,  p.  12f. 

*  Barker  v.  Barker,  14  Wis.  131 ;  Perry,  §  470  (3).  See  trustee's 
liabilities  to  beneficiary,  supra,  p.  127  ;  Comp.  Laws  Dak.  (1887),  §  3930; 
CodeGa.  (1895),  §§3183,  3184;  Rev.  Code N.  Dak.  (1895), §  4273  ;  Civ. 
Code  Cal.  (1885),  §  2237. 

«  Yeackel  v.  Litchfield,  13  Allen,  417. 
1  Morse  v.  Hill,  136  Mass.  60. 


THE  BENEFICIARY.  143 

where  there  is  a  presumption  that  more  was  earned,  or  the 
breach  was  wilful.^ 

Right  to  Information.  —  The  beneficiary  has  a  right  to 
full  information  about  the  concerns  of  the  trust  at  all  rea- 
sonable times,  although  only  contingently  interested,  (a) 

He  can  examine  the  deeds  or  opinions  of  counsel  con- 
sulted by  the  trustee  in  respect  to  the  trust  affairs,^  but,  as 
a  condition  precedent,  he  must  show  his  interest,  and  may 
not  examine  them  to  establish  an  interest.  He  can  exam- 
ine the  books  of  accounts  and  securities  at  all  reasonable 
times,  and  is  entitled  to  an  accounting  at  reasonable  inter- 
vals, usually'  once  a  year.' 

But  he  has  no  right  to  demand  that  the  trustee  shall 
assist  him  in  encumbering  his  interest  by  answering  the 
inquiries  as  to  how  his  interest  is  already-  encumbered, 
nor  can  a  stranger  acting  under  his  authority  require  the 
trustee  to  answer.* 

Right  to  Income.''  —  In  a  simple  trust,  as,  for  instance, 
where  A  holds  property  in  trust  to  permit  B  to  enjoy  the 
income,  the  income  as  it  accrues  belongs  to  B  imme- 
diately, and  he  may  require  the  trustee  to  give  him  a 
power  of  attorne}'  to  collect  it  for  himself;  but  in  the 
case  of  an  ordinar}'  trust,  income  means  net  income  after 
deducting  the  taxes  and  repairs  and  ordinary  current 
expenses  attending  the  estate.'  So  the  trustee  is  entitled 
to  collect  it,  and  make  the  necessary  deductions  before 
paying  it  over. 

In  such  cases,  the  net  income  can  only  be  ascertained 
yearlj',  and  therefore  would  seem  to  be  payable  only  on 

1  Supra,  p.  127. 

*  Smith  V.  Barnes,  L.  R.  1  Eq.  65  ;  Ames,  470,  n. 
'  As  to  acconnts,  see  supra,  p.  77. 

*  Low  V.  Bouverie,  3  Ch.  D.  1891,  p.  82. 

'  As  to  what  is  income,  see  supra,  pp.  104  et  seq. 

«  Watts,  Adm.  v.  Howard,  Adm  ,  7  Met.  478.     Supra,  p.  115. 

(a)  Sloan's  Estete,  7  Pa.  Dist.  Rep.  363  (1898). 


144  A  trustee's  handbook. 

the  settlement  of  the  j'early  account ;  but  as  the  income 
belongs  to  the  beneficiary,  the  court  would  probably  not 
allow  a  large  amount  to  lie  in  the  hands  of  the  trustee  for 
such  a  long  period  if  the  beneficiary  needed  it. 

Most  trust  instruments  have  an  express  provision  that 
the  net  income  shall  be  paid  quarterly  or  semiannually, 
which  provision  would  govern  in  all  cases. 

There  has  been  much  discussion  in  England  as  to  the 
beneficiarj-'s  share  of  the  first  year's  income,  and  the  de- 
cisions have  been  classified  by  Mr.  Lewin.^ 

In  Massachusetts,  b}-  statute  the  life  beneficiary'  is  en- 
titled to  the  income  on  the  fund  given  for  his  use  from  the 
date  of  the  testator's  death,  and  where  the  whole  or  a  part 
of  the  fund  does  not  produce  income,  on  the  conversion  of 
the  property  the  proceeds  are  divided  into  income  and 
principal  so  as  to  give  the  life  beneficiary  the  usual  rate  of 
income  as  explained,  supra,  page  105.  In  other  jurisdic- 
tions, in  the  absence  of  statute  the  beneficiary  onlj*  gets 
the  actual  income  that  accrues  on  the  fund,'^  but  the  inten- 
tion of  the  settlement,  express  or  implied,  will  govern,  if  it 
can  be  discovered.' 

The  trustee  may  withhold  income  to  reimburse  himself 
for  money  erroneousl3'  paid  to  the  beneficiar3',  but  cannot 
reimburse  himself  in  this  manner  for  an  individual  loan 
made  before  he  became  trustee.* 

As  to  what  constitutes  income,  see  pages  104  et  seq. 

Right  to  Support.  —  The  question  of  the  beneficiary's 
right  to  support  has  been  treated  already.^  In  Georgia 
there  is  an  unusual  statutory  provision,  that  where  the 
trustee  fails  to  support  the  beneficiary,  the  latter  may  con- 
tract debts  binding  the  trust  property.' 

^  Lewin,  pp.  321  et  spq. 

2  Williamson  i;.  Williamson,  6  Paige,  298. 

«  Keith  V.  Copelaud,  138  Mass.  303. 

*  Supra,  p.  134;  infra,  p.  154. 

*  Supra,  pp.  65  and  69. 

«  Code  of  Ga.  (1895),  §  3187. 


THE  BENEFICIAEY.  145 

Right  to  a  Conveyance.  —  If  the  trust  is  merely  a  dry 
trust,  that  is  to  say,  if  A  is  given  pi'operty  simply  to  hold 
in  trust  for  B,  or  if  the  purposes  of  the  trust  have  been 
accomplished,  and  there  is  no  reason  why  it  should  be 
continued,  and  all  the  beneficiaries,  being  sui  Juris,  desire 
it,  the  trust  may  be  terminated  or  modified  in  any  wa}'.^ 
Though  b}'  statute  in  New  York  the  court  may  in  its  dis- 
cretion refuse  to  order  a  convej-ance.'* 

If,  in  such  case,  one  of  the  beneficiaries  objects,  the  couif 
may  sever  the  trust,  and  order  the  shares  of  the  others  td 
be  convej-ed ; '  but  as  a  general  rule,  the  trustee  may  say 
that  he  will  convey  all  or  none.* 

The  English  rule,  which  also  prevails  in  some  of  the 
States,  is  that,  the  beneficial  estate  having  vested  abso- 
lutely and  entirel}'  in  the  beneficiary',  he  may  call  for  a 
conveyance  if  he  be  sui  Juris  ;  *  but  the  American  rule 
prevailing  in  most  States  is,  that,  although  the  beneficiary 
be  sui  Juris,  and  have  the  whole  estate,  he  cannot  call 
for  a  conveyance  if  it  would  defeat  the  intention  of  the 
settlor,  as  in  such  a  case  the  purpose  of  the  trust  has  not 
been  accomplished.® 

Thus,  where  property  is  left  in  trust  for  A  until  he 
reaches  the  age  of  thirty-  years,  under  the  English  rule  A 
may  call  for  a  conveyance  on  becoming  of  age,  while  under 
the  American  rule  the  trust  continues  until  he  becomes 
thirty  years  old  ; ''  though  it  is  not  definitely  decided  that 
the  estate  might  not  be  taken  by  a  creditor,*  still  it  would 
seem  that  he  would  have  no  greater  right  than  his  debtor 

1  Goodson  V.  Ellisson,  3  Russell,  583  ;  Claflin  v.  Claflin,  149  Mass.  19. 

2  Lent  V.  Howard,  89  N.  Y.  169. 

«  Walker  v.  Deal,  106  Mass.  109  ;  Henderson's  Est.,  15  Phila.  598. 

*  Goodson  V.  Ellisson,  ubi  supra. 

^  Saunders  v.  Vautier,  4  Beav.  115  ;  Lewin,  p.  774. 

8  Seamans  v.  Gibbs,  132  Mass.  239;  Zabriskie  v.  Wetmore,  26 
N.  J.  Eq.  18;  Hutchison's  App..  82  Pa.  509;  Ames,  452,  n. ;  Rhoads 
V.  Rhoads,  43  111.  239;  Gunn  v.  Brown,  63  Md.  96 ;  Smith  v.  Smith,  70 
Mo.  App.  448 ;  Carney  v.  Byron,  19  R.  I.  283 ;  Krebs's  Estate,  184  Pa, 
St.  222. 

7  Claflin  V.  Claflin,  149  Mass.  19.  s  Ibid. 

10 


146  A  teustee's  handbook. 

through  whom  he  claims.^  But  where  the  estate  is  abso- 
lute and  unqualified  in  the  beneficiar}-,  and  can  be  alienated 
or  taken  for  his  debts,  and  he  desires  it,  he  may  have  a 
conveyance.'^ 

If,  however,  all  the  beneficiaries  and  the  trustee  agree 
to  terminate  the  trusts  in  such  a  case,  as  no  one  else  is 
interested,  and  there  is  no  one  who  can  object  even  under 
the  American  rule,  the  trust  can  be  determined  without  a 
decree,'  but  if  the  aid  of  the  court  is  sought  it  will  not  be 
given.* 

Nothing  less  than  the  whole  of  an  absolute  estate  will 
entitle  the  beneficiary  to  a  conve^'ance,  even  under  the 
English  rule.  Therefore,  if  there  are  contingent  or  unas- 
certained interests  there  can  be  no  agreement."  And  a 
beneficiary  who  has  a  life  estate,  with  power  of  disposition 
b}"  will,  has  not  such  an  absolute  estate  as  entitles  him  to 
a  conveyance  ;  *  nor  could  he  call  for  one  if  the  trustee  has 
discretion  as  to  the  application  of  the  income.''  If,  how- 
ever, the  interest  of  the  beneficiary  is  vested  subject 
merel}'  to  some  simple  dut3',.such  as  the  payment  of  an 
annuitj',  the  beneficiar}'  may  have  a  conveyance  by  secur- 
ing the  annuit}'  properly.  But  obviously  the  maker  of  the 
trust  can  prevent  the  beneficiary's  calling  for  a  conveyance 
even  under  the  English  rule,  by  making  a  small  provision 
for  some  person  unascertained,  or  for  the  trustee  himself. 

The  trustee  cannot  set  up  superior  title  in  a  suit  for  a 
conveyance.*  Nor  can  the  beneficiary  deny  the  trustee's 
title  if  he  is  his  landlord,  nor  can  the  beneficiary  buy  in  a 
tax  title  and  hold  it  against  the  estate.® 

1  Young  V.  Snow,  167  Mass.  287. 

2  Sears  v.  Choate,  146  Mass.  39.5. 

'  Lemen  v.  McComas,  63  Md.  153. 

*  Young  V.  Snow,  uhi  supra. 

*  Brandenburg  v.  Thorndike,  139  Mass.  102;  Walton  v.  FoUansbee 
(HI.),  23  N.  E.  Rep.  3.32. 

«  Sise  V.  Willard,  164  Mass.  48. 
'  Russell  V.  Grinnell,  10.5  Mass.  425. 

8  Nay  land  v.  Bendy,  69  Tex.  711. 

9  Supra,  p.  38. 


THE  BENEFICIARY.  147 

Right  to  Possession.  — Ordinarilj^  in  America  tlie  right 
of  possession  of  the  real  estate  and  chattels  belongs  to  the 
trustee  ;  ^  but  if  the  instrument  intends  that  the  beneficiary 
is  to  enjoy  them  in  specie,  he  will  be  entitled  to  possession, 
and  b}-  statute  in  England  the  right  of  possession  is  in  the 
beneficiar}-.^  As,  for  instance,  where  he  is  intended  to 
reside  in  a  house  and  use  the  furniture.  But  where  the 
personal  property  is  likely  to  be  injured  or  lost  in  his  pos- 
session, he  may  be  required  to  give  security  for  it.  If  he 
is  given  the  use  of  personal  property  he  may  wear  it  out, 
and  neither  he  nor  the  trustee  will  be  required  to  replace 
it ;  and  unless  they  are  heirlooms  or  the  appurtenances  of 
an  estate,  such  as  the  tools  on  a  farm  or  the  furniture  of  a 
furnished  house,  he  may  use  them  wherever  he  pleases.* 

Where  the  instrument  has  no  specific  directions,  the 
trustee  will  be  justified  in  putting  the  beneficiary  in  posses- 
sion of  a  dwelling-house  or  farm  as  a  home  ;  but  the  bene- 
ficiary cannot  compel  him  to  buy  him  a  residence,  though 
the  trustee  may  do  so.* 

The  beneficiary  has  no  right  to  the  possession  of  the 
trust  securities ;  but  where  he  is  given  the  dividends  on 
certain  specific  stocks,  or  the  rents  of  certain  specific 
estates,  he  can  require  the  trustee  to  give  him  a  power  of 
attorney'  to  collect ;  but  where  the  trustee  has  the  duty  to 
manage  the  estate  and  pay  over  the  net  income,  the  bene- 
ficiarj'  has  no  such  right. 

The  Beneficiary  may  lose  his  Rights  against  the  Tms- 
tee  by  Release,  Acquiescence,  and  the  Running  of  the 
Statute  of  Limitations.  —  If  the  beneficiary  is  sui  juris,'^ 
and  fully  informed,  and  has  a  full  knowledge  and  appre- 

1  Dorr  V.  Wainwright,  13  Pick.  328.     Supra,  pp.  38  and  86. 

*  Ames,  467,  n.  2. 

»  Supra,  pp.  91,  108  ;  Lewin,  p.  768. 

*  Schaffer  v.  "Wadsworth,  106  Ma.«s.  19. 

*  A  married  woman  is  sui  juris,  and  may  release  as  to  her  separate 
estate ;  Walker  v.  Shore,  19  Yes.  Jr.  387 ;  but  a  married  woman 
withont  power  of  anticipation  cannot  release.  Fyler  v.  Fyler,  S  Bear. 
550,  563. 


148  A  trustee's  hajstdbook. 

ciation  of  the  facts,  he  may  make  a  valid  and  binding 
release  of  any  claim  he  has  against  the  trustee  for  a 
breach  of  trust  or  otherwise.^  If,  however,  the  beneficiary 
has  come  of  age  lately,  he  should  be  advised  by  counsel, 
as  his  inexperience  may  form  a  ground  to  invalidate  his 
action,  (a)  Nor  will  a  beneficiary  be  bound  by  his  release 
if  there  was  fraud,  accident,  or  mistake.'^ 

If  the  beneficiary  knew  and  urged  a  breach  of  trust,  he 
not  onl}'  cannot  recover,  but  is  liable  to  contribution,' 
even  though  the  beneficiary  be  a  married  woman  without 
power  of  anticipation.* 

If  the  beneficiary  who  is  sui  Juris  assents  to  a  breach 
of  trust,  such  as  an  improper  investment,  he  cannot  sub- 
sequently recover  the  loss,  if  he  was  fully  informed  ;  but 
the  assent  to  one  improper  investment  will  not  authorize  a 
second  of  the  same  character.^  If  he  has  been  misled  by 
the  trustee  his  assent  will  not  conclude  him,  and  he  may 
disaflEirm  the  transaction  on  learning  the  truth,'  even 
though  the  transaction  has  been  set  forth  in  an  account  set- 
tled in  court.''  So,  also,  if  the  beneficiar}'  who  is  sui  jwis 
knows  of  a  breach  of  trust,  and  neglects  to  make  anj^ 
claim,®  or  does  not  make  it  for  an  unreasonable  time,'  he 
will  be  taken  to  have  assented,  and  so  cannot  complain  ; 
but  time  will  not  deprive  a  beneficiary  of  his  remed}*  un- 
less he  has  been  guilty  of  laches ;  ^^  a  remainderman  will 

1  Pope  V.  Farnsworth,  146  Mass.  339 ;  Brice  v.  Stokes,  11  Ves.  Jr. 
319,  325. 

2  Perry,  §  922. 

8  Raby  v.  Ridehalgh,  7  DeG.,  M.  &  G.  104.     See  supra,  p.  125. 

*  Generally,  but  by  statute  in  England ;  see  Griffith  v.  Hughes, 
3  Ch.  D.  1892,  p.  105. 

5  Mant  V.  Leith,  15  Beav.  524  ;  Adair  v.  Brimmer,  74  N.  Y.  539. 

6  Nichols,  Appellant,  157  Mass.  20. 

7  Morse  v.  Hill,  136  Mass.  60.         »  Badger  v.  Badger,  2  Wall.  87. 

9  Denholm  v.  McKay,  148  Mass.  434,441  ;  Quirk  v.  Liebert,  12  App. 
D.  C.  394. 

10  Prevost  v.  Gratz,  6  Wheat.  481,  498,  Story,  J.;  transfer  of  shares 
after  60  years  held  barred  :  Halsey  v.  Tate,  52  Pa.  St.  311  ;  Iverson  v. 
Saulsbury,  65  Ga.  724  ;  Speidel  v.  Henrici,  120  U.  S.  377. 

(n)  Wade  v.  Lobdell,  4  Cush.  510;  Field  v.  Middlesex  Banking  Co., 
26  So.  Rep.  365  (Miss.  1899). 


THE   BENEFICIARY.  149 

not  be  bound  until  bis  estate  falls  into  possessiouo^  But  a 
minor  may  cut  himself  off  by  inducing  the  trustee  to  act  by 
fraud.  ^ 

What  constitutes  laches  depends  on  the  circumstances 
of  each  case,  but  as  a  general  rule  mere  lapse  of  time  itself 
will  not  bar  the  beneficiar}'  where  the  position  of  others 
has  not  been  changed.* 

But  a  beneficiary  who  has  delaj-ed  electing  whether  or 
not  to  confirm  a  sale,  in  order  to  see  whether  the  property 
will  rise  or  fall,  cannot  elect  at  a  later  time.* 

Ordinarily  the  statute  of  limitations  will  not  run  against 
the  beneficiary-,^  since  the.  possession  of  the  trustee  is  in 
the  interest  of  the  beneficiary  ;  but  if  the  trustee  takes  an 
adverse  position,  repudiates  the  trust,  and  brings  the  mat- 
ter home  to  the  beneficiar}'  so  that  he  is  compelled  to  take 
action,^  he  may  take  the  benefit  of  the  statute  and  the 
time  will  run  from  the  date  when  he  brought  his  adverse 
claim  distinctly  to  the  beneficiary's  notice  ;  (a)  but  the  stat- 
ute will  not  begin  to  run  against  the  remainderman  until 
his  estate  vests  in  possession ;  nor  will  it  begin  to  run  so 
long  as  the  beneficiary  is  under  the  control  of  the  trustee. 

IV.  Rights  against  Strangers.  —  The  beneficiary  has 
no  claim  to  the  property  itself,^  but  he  may  constitute  any 
person  into  whose  hands  it  has  come  wrongfully  a  trustee 
for  him.*  As,  for  instance,  a  bank  which  has  received 
stocks  and  bonds,  which  it  knows  to  belong  to  the  trust 

1  Bennett  v.  CoUey,  5  Sim.  181 ;  S.  C.  2  Myl.  &  K.  225 ;  but  see 
Browne  v.  Cross,  14  Beav.  105. 

^  Preceding  page,  n.  3. 

«  Morse  v.  Hill,  136  Mass.  60,  65,  66. 

♦  Hoyt  V.  Latham,  143  U.  S.  553 ;  Curtis  v.  Lakin,  94  Fed.  Rep.  251 
(C.  C.  Utah,  1899). 

6  Speidel  v.  Henrici,  1 20  U.  S.  377 ;  Riddle  v.  Whitehill,  135  U.  S.  621 . 

«  Philippi  V.  Phillippe,  115  U.  S.  151  ;  Davis  v.  Coburn,  128  Mass. 
377  ;  Hubbell  v.  Medbury,  53  N.' Y.  98. 

^  Stimpson,  Am.  Statute  Law,  p.  237. 

8  Third  National  Bank  v.  Lange.  51  Md.  138. 

{a)  Statute  runs  from  time  of  distribution,  Jones  i'.  Home  Savings 
Bank,  118  Mich.  155;  or  from  date  of  decree  of  distribution,  supra, 
p.  119. 


150  A  trustee's  handbook. 

estate,  as  secnrit}'  for  a  personal  loan  to  the  trustee,  holds 
the  stocks  and  bonds  in  trust  for  the  beneficiaries.^  Al- 
though the  beneficiary  must  sue  in  the  name  of  the  trustee, 
the  defendant  cannot  set  up  the  defence  that  the  trustee 
was  a  joint  wrongdoer  in  pari  delicto.^ 

A  disseisor  will  not  be  held  a  trustee  since  he  claims 
the  property  b}'  a  title  which  supersedes  that  of  the  trus- 
tee ;  *  and  a  purchaser  for  value  without  notice  takes  the 
propertj'  free  of  trust,  although  he  claims  under  the  trus- 
tee, that  is  to  sa}',  if  the  transferee  bought  the  estate  for 
value,  without  notice  of  the  trust,  then  he  in  a  court  of 
equity  is  equally  meritorious  with  the  beneficiary,  and  the 
court  will  not  help  the  beneficiary  against  him,  and  so  he 
may  keep  his  legal  title,  and  will  not  be  compelled  to  hold 
it  as  trustee.* 

A  purchaser  with  notice  from  the  trustee,  if  he  denies 
the  beneficiary's  title,  c^n  avail  himself  of  statute,  and  it 
will  begin  to  run  from  the  time  when  the  beneficiary  is  in 
possession  and  not  under  disability  ;  and  in  case  of  fraud, 
from  the  discovery  of  the  fraud,  or  when  it  might  have 
been  discovered  with  reasonable  diligence  ;  ®  and  the  usual 
period  of  adverse  possession  is  good  against  the  benefi- 
ciary.® 

Aside  from  those  who  claim  by  a  superior  or  adverse 
title,  the  beneficiary  may  follow  the  property-  as  long  as  it 
can  be  identified ; ''  and  if  it  can  be  clearly'  shown  that 
other  property  has  been  substituted  for  the  trust  property, 
the   substituted   property   can   be   followed.     Where   the 

1  Loring  v.  Brodie,  134  Mass  453. 

2  Wetmore  v.  Porter,  92  N.  Y.  76. 

*  Supra,  p.  24. 

*  Supra,  p.  39. 

s  McCoy  V.  Poor,  56  Md.  197. 

6  Molton  t'.  Henderson,  62  Ala.  426 ;  Williams  v.  First  Presb.  Soc, 
1  Ohio  St.  478 ;  Ward  v.  Harvey,  1 1 1  Ind.  471 ;  Hall  v.  Ditto,  12  S.  W. 
Rep.  941  (Ky.) ;  Merriam  v.  Hassam,  14  Allen,  516,  520;  Atty.  Gen. 
V.  Proprietors,  etc.,  3  Gray,  1. 

■J  See  purchaser  for  value,  supra,  p.  39. 


THE  BENEFICIARY.  151 

trust  funds  form  only  part  of  the  consideration  of  the  sub- 
stituted property,  the  trust  may  be  enforced  to  the  extent 
of  the  trust  property.^ 

Money  is  said  to  have  no  earmark,*  hence  if  it  becomes 
so  mingled  with  other  funds  that  its  separation  is  impos- 
sible, the  beneficiary  becomes  a  simple  creditor  merely.^ 
The  mere  commingling  of  the  trust  moneys  does  not  neces- 
sarily prevent  their  identification,  but  makes  it  more  diffi- 
cult.* They  do  not  lose  their  identity  if  they  appear  as  a 
sum  added  to  the  other  sums/  nor  will  the  trustee  be  pre- 
sumed to  have  used  the  trust  funds  for  himself ;  ®  so  the 
beneficiary  may  claim  all  the  trustee  cannot  identify,  and 
repayment  to  him  on  the  eve  of  bankruptcy  is  not  a  fraud- 
ulent preference ; '  but  a  person  who  receives  property 
from  an  unfaithful  trustee  cannot  be  held  to  be  trustee  of 
property  which  cannot  be  connected  with  the  trust  fund.^ 

Stock  is  like  money,  one  share  is  as  good  as  another ; 
so  the  beneficiary  can  take  all  shares  in  the  company  in 
the  trustee's  hands  irrespective  of  the  name  they  are  regis- 
tered in.  3 

"Where  the  beneficiary  has  become  a  simple  creditor,  he 
is  preferred  in  Georgia,  Missouri,  and  Wisconsin  *°  next 

1  Cases  on  tracing  unmingled  funds  contra  ;  Underhill,  458  n. 
a  Deg  V.  Deg,  2  P.  Wms.  411,  414. 

8  Penuell  v.  Deffell,  4  DeG.,  M.  &  G.  372, 381 ;  Wetherell  v.  O'Brien, 
140  111.  146,  151. 

*  Houghton  V.  Davenport,  74  Me.  590. 

6  Re  Hallett,  Knatchbull  v.  Hallett,  13  Ch.  D.  696,  and  Fennel!  v. 
Deffell,  supra.  See  Morse  on  Banks  and  Banking,  3d  ed.,  §  590  ;  Hunt 
V.  Smith,  43  Atl.  Rep.  428  (N.  J.  1899);  Morrison  v.  Lincoln  Savings 
Bank,  57  Neb.  225. 

*  National  Bank  v.  Insurance  Co.,  104  U.  S.  54.  In  re  Holmes,  37 
App.  Div.  N.  Y.  15  (1899). 

7  Lewin,  p.  1025.  ^  Howard  v.  Fay,  138  Mass.  104. 

»  Marshall  t-.  Marshall,  53  Pacific  Rep.  617  (Col.  1899) ;  Draper  v. 
Stone,  71  Me.  175. 

w  Ga.  Code  (1895),  §  3189  ;  Bircher  v.  St.  Louis  Sheet  Metal  Co., 
77  Mo.  App.  509;  Evangelical  Synod  v.  Schoeneich,  143  Mo.  652; 
McI.«od  V.  Evans,  66  Wis.  401.  See  Bowers  v.  Evans,  71  Wis.  133,  and 
Mercantile  Trust  Co.  v.  St.  Louis,  &c.  Ry.  Co ,  99  Fed.  Rep.  485  (Cir. 
Ct.  Mo.  1900). 


152  A  TRUSTEE'S  HANDBOOK. 

to  funeral  expenses,  but  generally  a  beneficiary  has  no 
preference  on  account  of  the  nature  of  his  claim, ^ 

The  beneficiary  is  not  bound  to  follow  the  trust  funds 
if  he  prefers  to  hold  the  trustee ;  ^  but  he  may  elect  which 
he  will  pursue ;  he  cannot  however  hold  both  remedies, 
and  must  elect  one  of  them.* 

If  he  elect  to  follow  the  property  he  may  choose  whether 
he  take  the  trust  property  as  it  is,  or  have  it  converted  and 
charge  the  trustee  with  loss."* 

Right  against  Stranger   aiding   in  Breach  of  Trust.  — 

The  beneficiary  has  an  equitable  suit  against  a  person  who 
aids  in  a  breach  of  trust ;  as  for  instance  against  a  person 
to  whom  the  trustee  has  made  a  wrongful  payment  in  dis- 
tributing the  estate,  or  a  tenant  for  life  to  whom  he  has 
paid  or  loaned  part  of  the  corpus  of  the  estate,^  and  this 
irrespective  of  the  trustee's' right  to  recover  the  payment. 
So  too  he  has  a  direct  claim  where  a  banker  delivered  up 
to  one  trustee  the  bonds  ®  or  money  ^  which  were  confided 
to  him  by  three  trustees,  or  where  a  corporation  trans- 
ferred stock  improperly,  that  is  to  say,  in  a  manner  which 
it  knew  to  be  a  violation  of  the  trust.* 

In  such  cases  they  will  have  notice  of  the  trust  if  it  is 
described  on  the  face  of  the  certificate,  although  the  mere 
occurrence  of  the  word  "  trustee  "  has  been  held  not  to  be 
notice ;  ^  but  the  general  rule  seems  to  be  that  the  word 

1  Little  V.  Chad  wick,  151  Mass.  109  ;  Cavin  v.  Gleason,  105  N.  Y. 
256.     See  Amer.  and  Eng.  Encyc.  Law  (1st  ed.),  vol.  27,  p.  257. 

2  Evans's  Estate,  2  Ashmead,  470 ;  Wayman  v.  Jones,  4  Md.  Ch. 
500 ;  Clark  v.  Wright,  24  S.  C.  526. 

8  Barker  i;.  Barker,  14  Wis.  131 ;  Hodges  v.  Bullock,  15  R.  I.  592, 
595.  *  Supra,  pp.  128  and  142. 

^  Cowper  V.  Stoneham,  68  L.  T.  R.  18;  Dixon  v.  Dixon,  L.  R. 
9  Ch.  Div.  587. 

8  Mendes  v.  Guedella,  2  Johns.  &  Hem.  259.     Supra,  p.  88. 

7  Magnus  v.  Queensland  N.  Bk.,  37  L.  R.  Ch.  Div.  466. 

8  Lowell,  Transfer  of  Stock,  §  66;  Loring  y.  Salisbury  Mills,  125 
Mass.  138;  Bayard  v.  Farmers  &  Mechanics'  Bank,  52  Pa.  St.  232. 

®  Lowell,  Transfer  of  Stock,  §  69 ;  Albert  v.  City  of  Baltimore, 
2  Md.  159  ;  Stockdale  v.  Soath  Sea  Co.,  Barnardston,  363. 


THE  BENEFICIARY.  153 

"  trustee  "  alone  is  a  sufficient  notice  of  a  trust  to  put  the 
purchaser  or  corporation  on  its  inquiry  as  to  the  trustee's 
right  to  transfer  ;  ^  they  must  ascertain  the  right  of  the 
trustee  to  make  the  proposed  transfer  at  their  peril.  The 
fact  that  there  is  a  usage  to  make  transfers  ^  is  not  an  ex- 
cuse ;  nor  can  they  rely  on  the  power  of  sale  which  accom- 
panies the  office  of  executor,*  but  must  ascertain  if  he  has 
it.  If  they  know  that  the  executor  is  acting  in  fact  as 
trustee,  under  the  title  of  executor,''  they  are  liable. 

As  this  duty  is  placed  upon  the  corporation,  it  may 
require  the  trustee  making  the  transfer  to  supply  the  docu- 
ments or  other  evidence  showing  his  right  to  make  the 
transfer,  but  in  the  absence  of  a  by-law  or  statute  requir- 
ing a  deposit  of  the  documents,  it  can  only  insist  on  in- 
spection of  them,  and  not  on  the  filing  of  copies.^ 

If  the  beneficiary  is  actually  in  possession  of  the  trust 
property,®  he  may  maintain  any  action  for  the  property 
which  any  other  bailee  might  maintain ;  and  no  one  but  the 
trustee,  or  some  one  claiming  under  him,  can  set  up  his 
title  against  the  beneficiary,'^  and  in  Pennsylvania  he  might 
maintain  an  action  for  its  recovery,*  where,  owing  to  lack 
of  equity  courts,  the  beneficiary  has  unusual  privileges.' 

Ordinarily,  the  possession  of  the  beneficiary  is  the  pos- 
session of  the  trustee,  and  he  must  sue  in  the  name  of  the 
trustee.^" 

He  cannot  protect  the  property  in  equity  any  more  than 

1  Shaw  V.  Spencer,  100  Mass.  382 ;  Bayard  v.  Farmers  &  Mechanics' 
Bank,  ubi  supra.     Supra,  p.  40. 

2  Shaw  V.  Spencer,  100  Mass.  382. 

3  Lowell,  Transfer  of  Stock,  §  72. 
*  Ibid.,  §  73. 

6  Bird  V.  Chicago,  I.,  &  N.  Railroad,  137  Mass.  428. 
«  Newhall  v.  Wheeler,  7  Mass.  189. 
^  Stearns  v.  Palmer,  10  Met.  32. 

8  Bailey  v.  N.  Eng.  Mat.  L.  Ins.  Co.,  114  Mass.  177. 

9  Fernstler  u.  Seibert,  114  Pa.  St.  196 ;  Miller  v.  Zufall,  113  Pa.  St. 
817. 

10  Supra,  p.  141,  note  (a),  and  p.  149,  for  instances  where  beneficiary 
may  sne  in  own  name. 


154  A  TRUSTEE'S  HANDBOOK. 

at  law,  and  could  not,  for  instance,  restrain  the  assessors 
from  taxing  the  estate,^  nor  sue  in  tort  for  an  injury  to  it.^ 

V.  Liabilities.  —  The  beneficiary  incurs  no  liabilities 
through  his  beneficial  ownership,  unless  it  be  for  taxation. 
He  may  be  liable  for  taxes  where  the  trustee  is  a  non- 
resident, and  such  a  tax  is  constitutional.* 

He  is  not  liable  as  an  owner,  and,  for  instance,  cannot 
be  sued  for  an  accident  caused  by  the  blowing  over  of  a 
fence.* 

He  is  not  liable  to  indictment  for  a  nuisance  on  the  trust 
property.^  He  does  not  become  liable  as  a  stockholder, 
nor  where  a  property  qualification  is  needed  does  he  gain 
a  vote  by  his  ownership.^ 

A  beneficiary  who  induces  a  trustee  to  commit  breach 
of  trust  is  liable  to  the  other  beneficiaries,  and  may  be 
liable  to  the  trustee,  but  his  liability  is  not  affected  by  the 
fact  that  he  is  a  beneficiary,  but  he  becomes  liable  by  his 
acts  as  an  individual.  If  he  obtains  a  wrongful  advance 
of  the  principal,  the  trustee  may  withhold  his  income  to 
make  up  the  deficit,'  but  the  court  will  not  order  him  per- 
sonally to  refund  a  payment  made  by  the  trustee  and  dis- 
allowed in  the  trustee's  account,  and  which  the  beneficiary 
took  innocently.  In  such  cases  the  trustee's  remedy  does 
not  go  farther  than  the  right  to  recoup  out  of  the  income  ;  * 
but  his  co-beneficiary  may  have  a  right  to  recover  from 
him  personally.^  The  trustee  cannot  withhold  the  income 
as  against  an  assignee  of  the  beneficiary's  estate  to  reim- 
burse himself  for  money  lent  the  beneficiary  before  he  was 
appointed  trustee.^** 

If  he  litigates  unnecessarily,  he  may  be  liable  for  costs. 

1  Western  Railroad  Co.  v.  Nolan,  48  N.  Y.  513. 

2  Loring  v.  Salisbury  Mills,  125  Mass.  138,  141. 

8  Supra,  p.  25.  *  Norling  v.  AUee,  10  N.  Y.  Sup.  97. 

6  People  V.  Townsend,  3  Hill,  479.  "  Lewin,  p.  247. 

7  Crocker  i-.  Dillon,  133  Mass.  91. 

8  Bate  V.  Hooper,  5  DeG.,  M.  &  G.  338.  ^  Supra,  p.  152. 

10  Abbott  V.  Foote,  146  Mass.  333;  Mass.  Pub.  Stat.  (1882),  ch.  168, 
§  15 ;  supra,  p.  134. 


PART  IV. 

INTERSTATE    LAW. 

A  TRUST  is  governed  by,  and  construed  according  to,  the 
law  of  the  jurisdiction  where  it  is  established,  (a)  even 
when  enforced  elsewhere.  Thus  a  Connecticut  beneficiary 
could  not  be  deprived  in  New  York,  by  the  New  York  stat- 
ute forbidding  alienation,  of  the  power  of  pledging  stock 
which  he  had  under  the  law  of  Connecticut ;  (6)  and  in  such 
matters  the  decree  of  the  court  establishing  the  trust  in  the 
original  jurisdiction  is  conclusive  in  all  jurisdictions ;  (c) 
but  a  trust  is  invalid  if  it  is  contrary  to  the  law  or  policy 
of  the  jurisdiction  where  it  is  sought  to  enforce  it.  Thus 
a  trust  of  land  for  a  beneficiary  in  a  jurisdiction  where  the 
beneficiary  cannot  hold  land  himself  is  invalid.^ 

A  trust  can  be  enforced  wherever  the  property  is  itself ,'' 
or  wherever  personal  service  can  be  got  on  the  trustee,' 
even  though  it  concern  land  in  another  jurisdiction,  since 
the  court  can  commit  the  trustee  for  contempt  if  he  refuses 
to  obey  its  decree,  or  can  appoint  a  trustee  in  his  place  to 
execute  it;*  but  if  the  trust  is  established  by  the  judicial 
decree  of  one  State,  it  will  not  be  enforced  by  the  courts 
of  another  State  unless  it  concern  real  estate  in  that  other 
State,*  and  trusteeship  be  taken  out  there.  Or  in  New 
Jersey  if  a  resident  beneficiary  desires  it.* 

The  courts  of  a  State  by  whose  decree  a  trust  is  estab- 
lished may  regulate  the  trust,  although  both  the  trustees 
and   beneficiaries  reside  in  other    States ; ''    but  a  court 

1  Paschal  v.  Acklin,  27  Tex.  173.  «  Supra,  p.  8. 

8  Massie  v.  Watts,  6  Cranch,  148,  160.     Supra,  p.  140. 

*  Cooley  V.  Scarlett,  38  111.  316  ;  Story,  Eq.  Juris.,  11th  ed.,  §  1291. 

6  Mass.  Pub.  Stat.  (1882),  ch.  141,  §  28  ;  Jenkins  v.  Lester,  131  Mass. 
355  ;  Curtis  v.  Smith,  6  Blatch.  C  C.  537.     Supra,  p.  -140. 

6  Gen.  Stat.  N.  J.  (1895),  p.  394,  §  112.         ^  Supra,  p.  8,  and  p.  140. 

(a)  Fay  v.  Haven,  3  Met.  109;  Sewall  v.  Wilmer,  132  Mass.  131; 
Merrill  v.  Preston,  135  Mass.  451 ;  Rosenbanm  v.  Garrett,  57  N.  J.  Eq.  1 86. 

(6)  First  National  Bank  r.' National  Broadway  Bank,  156  N.  Y.  459. 

(c)  English  v.  Mclntyre,  29  App.  Div.  (N.  Y.)  439  ;  Laws  v.  WilliamB, 
66  N.  J,  Eq.  553. 


156  A  trustee's  handbook. 

can  appoint  a  trustee  to  carry  out  the  trusts  established 
by  a  foreign  will  if  it  has  the  trust  property  in  its  juris- 
diction.^ 

Non-resident  Trustee.  — When  the  trustee  removes 
from  the  State  or  remains  out  of  the  jurisdiction,  he  may 
be  removed." 

If  the  property  is  within  the  jurisdiction  and  there  is  a 
statute  vesting  the  estate  in  a  new  trustee,  the  matter  will 
be  terminated  ;  but  if  there  is  no  personal  service  on  the 
absent  trustee  and  the  property  is  with  him,  as  in  the  case 
of  personal  property,  or  if  there  is  no  statute  vesting  the 
estate  in  the  new  appointee,  a  conveyance  must  be  obtained 
from  the  former  trustee,  and  the  new  trustee  can  sue  him 
wherever  he  can  find  him.' 

In  Pennsylvania,  the  court  may  appoint  a  co-trustee  for 
a  non-resident  trustee ;  *  but  as  a  rule,  it  will  not  appoint 
a  non-resident  trustee,  and  in  some  jurisdictions  it  is  for- 
bidden to  do  so ;  ^  in  others,  where  the  beneficiary  is  a 
foreigner,  it  will  appoint  a  foreign  trustee.  If  a  non- 
resident trustee  holds  land  and  neglects  his  duty,  the 
court  can  in  some  States  by  statute  appoint  a  trustee,  and 
order  the  land  sold.^ 

The  court  can  give  a  foreign  trustee  leave  to  sell  land, 
and  remove  the  proceeds  to  the  jurisdiction  of  his  original  ap- 
pointment. So,  too,  it  can  order  personal  property  ^  to  be 
conveyed  to  a  non-resident  trustee  where  the  beneficiaries 

1  Rev.  Stat.  Ohio  (1890),  §  5990.  2  Supra,  p.  20. 

*  See  supra,  p.  140. 

*  Brightly's  Dig.  Pa.  (1894),  p.  2034,  §  52.  A  siugular  remedy, 
since  joint  action  of  the  trustees  is  indispensable. 

^  Supra,  p.  16.  Non-resident  trustees  are  usually  required  by 
statute  to  appoint  an  agent  within  the  State. 

6  Brightly's  Dig.  Pa.  (1894),  p.  2031,  §  30. 

"!  Rev.  Stat.  Me.  (1883),  ch.  65,  §  39;  Code  of  Va.  (1887),  §  2630; 
Code  W.  Va.  (1891),  p.  680,  §  4. 

8  Supra,  p.  9.  The  approval  of  an  account  showing  payment  to  a 
foreign  executor  is  equivalent  to  a  decree.  Emery  v.  Batchelder,  132 
Mass.  452.  < 


INTERSTATE  LAW.  157 

live  out  of  the  State,^  and  where  they  are  satisfied  that  a 
proper  bond  has  been  given.^ 

Where  a  trustee  takes  out  ancillarj-  trusteeship,  he  must 
settle  his  account  in  the  principal  jurisdiction  for  any  sur- 
plus funds  in  his  hands 'after  settling  his  account  in  the 
subsidiary-  jurisdiction.' 

A  trustee  need  not  inventory  or  account  for  foreign  real 
estate,  or  the  rents  of  it,  in  the  jurisdiction  of  his  appoint- 
ment.* 

In  order  to  control  the  land,  he  must  be  appointed  in 
the  jurisdiction  where  the  land  lies,®  and  if  he  sells  by 
order  of  court  it  must  be  b}'  the  order  of  the  court  where 
the  land  lies. 

Foreign  Investments.  —  As  a  general  rule,  a  court  will 
not  authorize  foreign  investments  beyond  its  jurisdiction 
and  control.  As,  for  instance,  mortgages  or  real  estate 
out  of  the  jurisdiction.®  This  rule  has,  however,  been 
more  observed  in  the  breach  than  in  the  compliance  by 
trustees. 

There  may  be  good  reason  why  a  foreign  investment 
would  be  authorized,  as,  for  instance,  where  the  beneficiary 
resides  otit  of  the  State  and  needs  a  home  ; ''  or  where  both 
trustee  and  beneficiary  reside  in  another  jurisdiction,  and 
only  come  into  the  jurisdiction  of  the  trust  to  account. 

Taxation.^  —  The  trustee  will  be  taxed  on  real  estate 

1  Mass  Pub.  Stat.  (18821,  ch.  144,  §  17;  Annot.  Stat.  Mich.  (1882), 
§5831;  Brij?htly's  Dig.  Pa.  (1894),  p.  2032,  §  40;  Code  Va.  (1887), 
§  2632  :  Gen.  Stat  Conn.  (1888), §§467, 468;  Code  Ala.  (1896),  §4179  ; 
Code  W.  Va.  (1891).  p.  680,  §§  4-6. 

2  Kv.  Stat.  (1894),  §§  4709-4711  ;  Gen.  Stat.  N.  J.  (1895),  p.  3685, 
§§  9,  10. 

'  Clark  I".  IJlackington,  110  Mass.  369.  Ancillary  jurisdiction  may 
order  proceeds  to  be  paid  to  the  principal  jurisdiction,  or  may  order 
distribution  themselves.  Welch  v.  Adams,  152  Mass.  74.  See  Emery 
V.  Batchelder,  132  Mass.  452. 

*  Supra,  p.  78. 

6  Generally,  and  Mass.  Pub.  Stat.  (1882),  ch.  141,  §  7. 

«  Supra,  p.  99  ;  Ormiston  v.  Ulcott,  84  N,  Y.  339. 

">  Amory  «;.  Greene,  13  Allen,  413.  *  Supra,  p.  25. 


158  A  trustee's  handbook. 

where  the  land  lies,  and  may  be  compelled  to  pay  a  tax 
on  the  income  in  his  home  State.^ 

The  trustee  may  be  liable  to  taxation  on  the  personal 
property  where  he  resides,  and,  if  the  beneficiary  resides 
in  another  State,  the  latter  may  also  be  liable  to  an  addi- 
tional tax.'^ 

The  statutes  are  too  numerous  and  varied  to  cite,  and 
the  principle  only  is  stated. 

1  Sach  laws  are  not  tmconstitational.    Hnnt  v.  'Perry,  165  Mass.  287. 
a  Supra,  p.  154. 


INDEX. 


ABANDON,  trustee  cannot  abandon  trust,  17. 
ACCEPTANCE   OF  TRUST,  4. 

See  Table  of  Contents,  p.  vii,  §  iii. 

need  not  accept  trust,  2. 

how  made,  4. 

implied  from  meddling  in  trust,  5. 

implied  from  not  disclaiming  seasonably,  6. 

duty  to  investigate  trust  deeds  and  property,  82,  83. 
ACCOUNT,  generally,  77  to  80. 

beneficiary  entitled  to,  143. 

corrected  by  one  beneficiary  all  get  benefit,  132. 

refusal  to  is  cause  for  removal,  20. 

must  keep  accurate  and  separate,  77. 

open  to  inspection  of  beneficiary,  77. 

should  be  settled  periodically,  77. 

settlement  in  court,  79-80. 

duty  to  examine  predecessors',  83,  85. 

form  of,  78. 

must  account  for  any  benefit  received,  29. 

liable  for  joining  in  false  account,  123,  124. 

trustee's  lien  until  settled,  120; 

effect  of,  79. 

fictitious  account  not  proper  method  of  getting  instructions 
of  court,  82. 

does  not  take  place  of  decree  of  distribution,  118. 

may  amount  to  a  decree  of  distribution,  118,  156. 

ends  liability,  129. 

expense  of  charged  to  whom,  29,  80. 
ACCUMULATIONS  OF  INCOME,  become  principal,  108. 
ACQUIESCENCE,  in  breach  of  trust  estops  beneficiary,  148. 


160  INDEX. 

ACTIONS.    See  Suits. 

ACTIVE  TRUSTEE.     See  Managing  Trustee. 

ADDITIONS.     See  Alterations,  Accumulations. 

ADMINISTRATOR.     See  Executor. 

ADMISSIONS,  by  beneficiary,  effect  of,  against  trustee,  61. 

against  each  other,  132. 

by  one  trustee,  64. 
ADVERSE  INTEREST,  trustee  cannot  have,  73. 

must  resign  if  he  acquires,  73. 

beneficiary  cannot  acquire,  38,  146. 
ADVICE,  of  counsel  excuses  what,  126. 

trustee  may  ask  court,  81,  118. 

beneficiary  no  right  to  give,  141. 
AGENT,  cannot  exercise  trustee's  powers,  48,  74. 

may  be  employed  when,  76. 
ALIEN,  as  beneficiary,  130. 

as  trustee,  13. 
ALIENATION  BY  BENEFICIARY,  what  passes,  134. 

of  equitable  estate,  134. 

restraint  on,  136-139. 

See  Restraint  on  Alienation. 
ALIENATION  BY   TRUSTEE,  39-45. 

effect  of  conveyance,  39. 

what  title  passes,  39,  40. 

attachment  and  execution,  41. 

set  off,  42. 
ALTERATIONS,  charge  on  principal,  114. 
ANCILLIARY  TRUSTEESHIP,  157. 
ANIMALS,  trusts  for,  130. 
ANTICIPATION.     See  Restraint  on  Alienation. 

provisions  against,  136. 
APPEAL,  73. 

duty  to  maintain,  74. 
APPLICATION  OF  PURCHASE  MONEY,  59-60. 
APPOINTEE,  may  disclaim  trust,  2. 

APPOINTMENT,   who  administers  estate,  under  general  or 
special  power,  12. 

exercise  of  general  makes  estate  assets,  135. 
APPOINTMENT   OF    TRUSTEE.     See    Table    of   Con- 
tents, p.  viii,  §  iv. 


INDEX.  161 

APPOINTMENT  OF  TRUSTEE,  13. 

made  when  necessary  or  proper,  6,  141. 

temporary  trustee  may  be  appointed,  6. 

how  made,  6-7. 

made  by  coui't  when,  7. 

what  court  has  jurisdiction,  8,  9,  140,  156. 

made  in  what  place,  8,  9. 

trustee  may  be  appointed  where  property  is,  140, 156. 

who  may  be  appointed  trustee,  14,  15,  16. 

foreign  appointment,  16,  156. 

who  are  proper  persons,  13-15. 

incomplete  without  title  to  the  property,  9. 

regularity  not  questioned  in  collateral  proceedings,  16. 
APPORTIONMENT,  none  of  dividends,  111. 

of  interest,  112. 

of  coupons,  113. 

at  end  of  life  estate,  113. 

on  conversion  of  security,  104. 
APPRECIATION  OF  PROPERTY,  belongs  to  principal,  107. 
ARBITRATION,  power  of,  64. 
ASSENT,  by  beneficiary  to  breach  of  trust,  148. 
ASSIGNMENT,   trustee's  general  assignment  does  not  pass 
trust  estate,  40. 

beneficial  estate  may  be  assigned,  133,  134. 
ATTACHING  CREDITOR  is  sometimes  purchaser  for  value, 

39. 
ATTACHMENT,  of  trust  property  for  trust  debts,  41. 

of  trust  property  for  trustee's  debts,  41. 

of  beneficiary's  estate,  134,  136  et  seq.,  145. 
ATTORNEYi  trustee  may  be  for  beneficiary,  72. 

expense  charged  to  trust  fund,  29. 

rule  as  to  employing  self  as,  28. 
ATTORNEY  OR  AGENT,  payment  to,  119. 

trustee  may  act  by  when,  49. 
AUGMENTATION.    See  Gain  and  Loss. 


BANKER,  liable  for  delivering  securities  to  wrong  person,  152. 
BANKRUPT,  is  unfit  to  be  trustee,  7,  14. 
BANKRUPT  TRUSTEE,  not  necessarily  removed,  20. 

11 


162  INDEX. 

BANKRUPTCY  OF  BENEFICIARY,  beneficial  estate  passes 
to  assignee,  133. 
gift  over  on,  valid,  139. 

BANKRUPTCY  OF  TRUSTEE,  does  not  afEect  trust  estate, 
40. 

discharges  his  liabilities,  129. 
BENEFICIARY,  who  may  be,  130. 

who  is  a,  131. 

person  who  may  receive  income  at  trustee's  pleasure  not, 
66,  131,  138. 

in  spendthrift  trust,  66,  131,  138. 

his  estate,  132. 

no  claim  on  trust  property,  23,  132. 

rights  against  trustee,  140  et  seq. 
enforced  where,  140,  156. 

can  compel  trustee  to  perform  trust,  141. 

interests  not  joint,  132. 

may  be  compelled  to  act  jointly,  132. 

estate  of  will  descend  like  other  property,  133. 

alienation  of  estate  of,  134. 

restraint  on  alienation  of  estate,  136. 

right  to  possession  of  trust  property,  38,  86,  147. 

not  usually  necessary  parties  to  suit,  23. 

admissions  by  do  not  bind  trust,  64. 

cannot  acquire  tax  title,  38,  146. 

cannot  deny  trustee's  title  as  landlord,  38,  146. 

is  not  stockholder  in  corporation,  24. 

expense  of  suit  to  protect,  allowed,  63. 

right  to  support,  66,  69,  144. 

maintenance  and  support  of,  66. 

support  apportioned  where  several,  68. 

right  to  conveyance,  145,  146. 

right  to  information,  77,  143. 

right  to  account,  77. 

right  to  income,  143. 

rights  as  creditor,  151. 

right  to  follow  property,  149. 

must  elect  whether  to  hold  trustee  or  follow  property,  152, 

stranger  aiding  in  breach  of  trust  liable  to,  152. 

in  possession  of  property  may  sue,  23-24,  153. 

contracts  with  trustee,  71,  72. 


INDEX.  163 

BENEFICIARY  —  continued. 

gifts  to  trustee,  72. 

payment  of  share  to  before  end  of  trust,  118. 

loss  of  rights,  147,  148,  149. 

no  right  to  advise  trustee,  141. 

may  be  notified  of  proposed  action,  81. 

may  disaffirm  transaction,  148. 

trustee's  liabilities  to,  121. 

may  choose  damages  or  property,  142. 

may  discharge  trustee,  16,  147. 

is  unfit  to  be  trustee,  14. 

liabilities,  153. 

causing  breach  of  trust  liable,  124. 

liable  for  fraud,  154. 

need  not  refund  payment,  154. 
BENEFIT,  trustee  can  take  none  from  trust,  27. 
BETTERMENTS,  not  apportioned,  106. 

charged  to  what,  115. 

BILL  FOR  INSTRUCTIONS,  82. 
BONDS,  when  required  of  trustees,  10. 

refusal  to  give  cause  for  removal,  19. 

sureties  may  be  required,  10. 

expense  of  Surety  Co.  charged  to  whom,  29. 

amount  required,  11. 

sureties  on  executor's  bonds  liable  for  his  acts  as  trustee,  12. 

liable  for  co-tmstee  if  joint  bond  given,  123. 

BONDS,  AS  INVESTMENTS,  97,  98. 
care  of,  88. 
purchase  of  bonds  at  discount  to  balance  ones  at  premium 

improper,  112. 
railroad  bonds  not  real  securities,  95. 
not  mortgage  bonds,  95. 

selling  at  premium,  need  not  be  converted,  90. 
interest  apportioned  when,  112. 

BONDSMEN.    See  Sureties. 

BONUS.     See  Commission. 

BOOKS  OF  ACCOUNT,  open  to  beneficiaries'  inspection,  77 

BREACH  OF  TRUST,  is  cause  for  removal,  19. 

but  not  if  merely  technical,  21. 

or  accidental,  21. 


164  INDEX. 

BREACH   OF   TRUST  — continued. 

stranger  aiding  in  liable,  152. 

liability  for,  joint  and  several,  121. 

damages  for,  127. 

contribution  among  those  liable,  125. 

beneficiary  may  elect  to  follow  property  or  trustee,  152. 

remedy  for  lost  how,  147,  148,  149. 

loss  by  breach  falls  on  principal,  113. 
BROKER,  commissions  charged  to  trust  fund,  29. 

commissions  as  between  principal  and  income,  117. 

rule  as  to  employing  self  as,  28. 

trustee  may  be  for  beneficiary,  72. 
BUILDING  LEASES,  62. 

BUILDING,  with  personal  property  conversion,  92. 
BUSINESS,  of  testator  carried  on  sometimes,  95,  96. 
BUSINESS  RISKS,  should  be  converted,  89. 


CAPABLE.     See  Incapable. 

trustee  should  be,  13. 

court  will  appoint  only  capable  trustee,  15. 
CAPITAL.    See  Principal  and  Income. 
CAPRICE,  is  not  discretion,  52. 

CAPRICE  OF  BENEFICIARY,  trustee  not  removed  for,  20. 
CAPRICIOUS  TRUSTS,  trusts  for  animals,  130. 
CARE  OF  TRUST  PROPERTY.     See  Custody. 
CESSER,  gift  over  of  beneficiaries'  estate  on  condition  valid, 

139. 
CESTUI  QUE  TRUST.     See  Beneficiary. 
CHANGE   OF   INVESTMENTS,  when  made,  94. 
CHARGES,  trustee's  lien  for,  120. 

See  Expenses. 
CHATTELS,  not  converted  when,  91. 

who  has  right  to  possession  of,  86,  108,  147. 
CHECKS,  who  may  draw,  87,  88. 
CHILD,  support  of,  where  parent  living,  70. 

payment  to  father  for,  71,  119,  125. 
CHOSE   IN   ACTION,  should  notify  obUgor,  85. 

effect  of  notice.    See  Notice, 


INDEX.  165 

CLAIM,  trustee  cannot  buy  up,  28. 

beneficiary  cannot  buy  up,  38,  146. 

beneficiary  has  none  to  trust  property,  23. 

but  may  follow  it  in  hands  of  stranger,  150-151. 
CLERK,  expense  of  charged  to  whom,  30. 
COLLECTION,  from  debtor  to  trust  and  self,  apportioned,  73. 
COLLECTION    OF   ASSETS,  83,  85,  122. 
COMMISSIONS.     See  Compensation. 

what  are  allowed,  31. 

from  what  fund  paid,  31-32. 

on  termination  of  trust,  32,  120. 

trustee  can  take  no  commission  from  strangers,  27. 

must  account  for  any  received,  29. 
COMPENSATION,  rule  as  to,  for  expert  services,  28. 

trustee  entitled  what,  30. 

extra  on  principal,  31. 

for  distribution  of  estate,  32,  120. 

rule  for  various  States,  33-36. 

trustee's  lien  for,  120. 
COMPETITION,  trustee  cannot  come  in,  73. 
COMPLETION   OF  DUTIES,  discharges  trustee,  16. 
COMPOUND  INTEREST,  charged  when,  93,  94,  127,  142. 
COMPROMISE   OF   SUIT,  when  proper,  64,  74. 
CONDITION,  on  which  income  to  cease  valid,  139. 

power  dependent  on,  50. 

purchaser  must  see  that  they  are  fulfilled,  59. 
CONFLICT   OF   LAWS.     See  Inter-State  law. 
CONSENT,  of  beneficiaries,  discharges  trustee,  16. 

of  beneficiary  as  a  condition,  50. 
CONSIDERATION,  must  be  returned  where  sale  disaflSrmed, 

142, 
CONTINGENT  INTEREST,  sufficient  to  intervene  in  appoint- 

ment  of  trustee,  141. 
CONTINGENT   REMAINDER,  sale  of,  56. 
CONTRACT,  to  what  extent  the  trustee  can  bind  the  estate,  6"). 

trustee  binds  himself  personally,  24,  65,  120. 

signing  as  "trustee  "  makes  no  difference,  25,  65,  120. 

for  sale  not  specifically  enforced  when  breach  of  trust,  59. 

but  trustee  liable  for  breach  of,  at  law,  59. 

as  to  compensation  valid,  30. 

between  trustee  and  beneficiary,  71,  72. 

with  beneficiary  may  be  set  aside,  72. 


166  INDEX. 

CONTRIBUTION  FOR   MAKING   GOOD   BREACH    OF 
TRUST,  from  co-trustee,  125. 
from  beneficiary,  125,  154. 
CONVERSION  OF  FUND,  apportionment  between  principal 

and  income,  105. 
CONVERSION  OF  REAL  INTO  PERSONAL  PROPERTY, 
improper,  91-92. 
of  real  into  personal  may  be  authorized  by  court,  92. 
of  infant's  estate,  92. 
on  cy  pres  doctrine,  92. 
implied  authority,  93. 

CONVERSION    OF  SECURITIES,  into  trust  investments, 
89,  90,  91. 
not  of  testator's  good  investments,  90. 
none  of  property  meant  to  be  enjoyed  in  specie,  91. 
securities  at  premium  not  necessarily  converted,  90, 

CONVEYANCE   BY  TRUSTEE,  what  title  passes  to  volun- 
teer, 39. 

to  purchaser  for  value,  39-40. 

to  assignee,  40. 

on  execution,  41. 

to  successor,  43. 

to  remainderman,  42. 
CONVEYANCE    TO    REMAINDERMEN,  necessary  when, 
119. 

right  of  beneficiary  to,  145. 
CONVEYANCE,  by  one  trustee  void,  38; 

beneficiaries'  right  to,  145,  146. 
CORPORATION,  may  be  a  trustee,  13. 

trusts  for,  130. 

liability  for  transfers  of  stock,  152-153. 

trustee  is  stockholder  in,  24. 

beneficiary  is  not,  24. 

trustee  liable  as  stockholder,  24. 
COSTS,  when  allowed,  29,  63,  81. 
CO-TRUSTEE,  cannot  delegate  trust  to,  74. 

liability  for  acts  of,  123,  124, 125. 

contribution  from,  125. 
COUNSEL,  expenses  charged  to  trust  fund,  29. 

rule  as  to  employing  self  as,  28. 

trustee  may  be  for  beneficiary,  72. 

advice  of,  does  not  excuse  mistake,  126. 
COUNTER   CLAIM.     See  Set-off. 


INDEX.  167 

COURT.     See  also  Probate  Courts. 

power  to  appoint  trustee  when,  6. 

what  court  has  jurisdiction  to  remove  trustee,  19,  140. 

will  remove  trustee  when.  19-20. 

will  not  remove  when,  20-21. 

may  itself  administer  trust,  6. 

may  exercise  its  discretion  in  removing  a  trustee,  19. 

will  appoint  trustees  when,  8. 

what  court  has  jurisdiction  to  appdint  trustees,  8,  155, 156. 

will  instruct  trustee  when,  81,  82. 

may  order  sale  of  trust  property,  57. 

controls  execution  of  powers  when,  51,  52. 
COVENANTS,  trustee  liable  on  in  lease,  63. 

or  deed,  25,  120. 
CREATOR  OF   TRUST.     See  Settlor. 
CREDITOR,  beneficiary's  rights  as,  151. 
CREDITOR  OF  BENEFICIARY,  his  rights  against  equitable 
estate,  134-140. 

may  set  off  debt  in  equity,  42. 

of  beneficiary  in  spendthrift  trust,  139. 

of  person  exercising  general  power  of  appointment  takes,  135. 

CREDITOR   OF  TRUST,  remedy  against  trustee,  41. 

remedy  against  trust  property,  41. 
CRIMINAL  LIABILITY,  for  nuisance  on  trust  property,  26. 

for  taking  trust  funds,  121. 
CURTESY  IN  TRUST  ESTATE,  44. 

in  equitable  estate,  133. 
CUSTODY  OF  TRUST  PROPERTY,  degree  of  care  required, 
89. 

cannot  give  to  co-trustee,  123. 

of  non-negotiable  securities,  88. 

of  negotiable  securities,  88. 

of  trust  chattels,  86,  87,  108,  147. 
CY  PR£:S  DOCTRINE,  sale  under,  56. 

conversion  under,  92. 


DAMAGES  FOR  BREACH  OF  TRUST,  measure  of,  127. 
usually  amount  of  loss  and  interest,  127. 
sometimes  replace  property  and  earnings,  128. 


168  INDEX. 

DAMAGES  RECOVERED,  not  apportioned,  106. 
DEATH  OF  HOLDER   OF   POWER,  destroys  power,  53. 
DEATH  OF   TRUSTEE, 

new  trustee  may  be  appointed,  6. 

what  become  of  office  aud  title,  2,  17,  43,  44,  46. 

office  and  title  pass  to  survivor,  17. 

ends  trusteeship,  17. 

liability  ends  at,  1^,  129. 
DEATH  OF   SOLE   TRUSTEE, 

title  passes  to  v?hom,  2,  17,  44,  46. 

how  title  passes  to  successor,  43. 
DEBT,  collected  from  individual  and  trust  debtor  apportioned, 
73. 

what  can  be  set  off,  42. 
DEBTOR,  trustee  cannot  convert  himself  into,  121,  151. 
DECLINE.    See  Disclaimer. 
DECREE,  of  sale  must  conform  to  statute,  55. 

appointing  trustee  should  oi'der  transfer  of  title,  10. 
DEED,  trustee  is  liable  on  covenants,  25,  120. 

when  Hable  on  recitals,  120. 
DEFEND,  general  power  to  defend  actions,  63. 
DELAY,  trustee  liable  for  delay  in  investing,  90. 

in  converting,  90. 

beneficiary  may  lose  rights  by,  149. 
DELEGATE,  cannot  delegate  trust,  74. 

trustee  cannot  delegate  powers,  48,  49. 

ministerial  acts  may  be  delegated,  49,  75,  76. 

may  employ  agent  where  there  is  necessity,  76. 

DEMAND,  of  one  trustee  sufficient,  64. 

DEPRECIATION   OF  PROPERTY,  after  payment  of  one 
beneficiary,  118. 
generally  loss  of  principal,  107,  113.  ' 

DESCENT,  of  equitable  estate,  133. 

of  legal  estate,  43,  44. 
DEVESTMENT   OF  OFFICE,  by  trust  ending,  16. 

by  death  of  trustee,  16. 

by  resignation,  17. 

by  removal,  19-21. 

DEVISE,  of  equitable  estate,  133. 
of  legal  estate,  43. 


INDEX.  169 

DILIGENCE,  necessary,  75,  85,  87. 

amount  required,  90,  99,  126. 
DIRJjCTOR,  trustee  is  eligible  as  stockholder  in  corporation,  24. 

beneficiary  is  not,  24. 
DISABILITY  OF   TRUSTEE,  effect  of,  17. 
DISAFFIRM,  beneficiary  can  disaffirm  transaction  where  mia- 
led,  71,  72,  148. 

can  disaffirm  sale  by  trustee  to  self,  58. 
DISAGREEMENT,  of  one  trustee  blocks  all  action,  47. 

with  other  trustees,  if  unreasonable  cause  for  removal,  20. 

with  beneficiary,  not  cause  for  trustee's  removal,  20. 

DISBARMENT,  defaulting  trustee  liable  to,  121. 
DISCLAIMER,  trust  may  be  refused,  2. 

whole  trust  must  be  refused,  3. 

if  one  of  several  trusts  in  same  instrument,  4. 

heir  or  representative  of  deceased  trustee  cannot  always,  2. 

form  of,  3. 

how  made,  3. 

by  refusing  to  give  bond,  3. 

effect  of,  4. 
DISCOUNT,  trustee  cannot  profit  by,  28. 

bond  purchased  at  discount  does  not  balance  one  at  pre- 
mium, 112. 
DISCRETION,  court  may  exercise  in  removing  trustee,  19. 

honest  exercise  of  not  cause  of  removal,  21. 

unreasonable  or  prejudiced  exercise  is  cause  for  removal,  21. 

personal  exercise  of  essential  to  execution  of  power,  47. 

cannot  be  exercised  by  any  one  but  trustee,  47,  48,  49. 

cannot  be  delegated  to  agent  or  co-trustee,  48. 

cannot  be  exercised  by  court,  48. 

controlled  by  court  when,  51,  52. 

amount  required  in  investing,  99. 

in  managing  trust,  126. 

what  is  sound  in  investing,  96,  97,  98. 

"  in  his  discretion  "  means  little,  95. 

of  trustee  as  to  support  of  beneficiary,  66,  67. 

in  spendthrift  trusts,  138. 

as  to  support  of  family,  138. 
DISCRETIONARY  POWERS,  execution  not  controlled  by 
the  court,  51-52. 


170  INDEX. 

DISCRETIONARY   POWERS  —  continued. 
reasons  for  execution  need  not  be  given,  52. ' 
not  liable  for  use  of,  126. 
execution  set  aside  for  fraud,  52,  53. 
paying  whole  fund  fraud,  69. 

DISCHARGE  OF  ENCUMBRANCE,  cost  apportioned,  113. 
DISCHARGE  OF  TRUSTEE.  See  Devestment  of  Office. 
DISCHARGE   OF   TRUSTEE,  by  end  of  trust,  16. 

by  beneficiary,  147,  148. 

in  various  ways,  129. 
DISSEISOR,  trustee  may  be,  133. 

of  property,  not  trustee,  150. 
DISTRIBUTION,  of  trust  fund  at  trustee's  risk,  117. 

payment  of  shares  at  different  times,  118. 

may  have  decree  for,  118. 

by  fictitious  account  improper,  118. 

compensation  for,  120. 

conveyance  to  remainderman  necessary  when,  119. 
DIVIDENDS,  ordinary  are  income,  109. 

on  wasting  investments,  109. 

extra  or  stock  belong  to  whom,  109-110. 

not  apportioned,  111. 
DIVISION   OF  TRUST,  cannot  disclaim  part,  8. 

cannot  accept  part,  4. 

payment  of  part,  118. 
DOWER,  in  trust  estate,  44. 

in  equitable  estate,  133. 
DRUNKARD,  unfit  trustee,  14. 

may  be  removed  from  office,  20. 
DUTY,  neglect  of.     See  Neglect. 

ignorance  of  no  excuse,  126. 

where  trustee  is  in  doubt,  may  notify  beneficiary  of  in- 
tended action,  81. 

may  get  instructions  of  court,  81,  82. 

to  exercise  utmost  good  faith,  72. 

not  to  aid  adverse  claimants,  73. 

not  to  come  in  competition,  73. 

is  all  to  the  trust,  73. 

to  exercise  the  trust  personally,  1,  74. 

to  examine  trust  property  and  documents,  82,  83. 


INDEX.  171 


DUTY  —  continued. 

to  examine  predecessor's  accounts,  85,  123. 

to  take  possession  of  property,  82-83. 

to  convert  into  trust  investments,  89-90. 

to  invest,  93. 

in  investing  is  what,  95.  , 

as  to  class  of  investments,  96-100. 

as  to  testator's  business,  95. 

to  keep  accounts,  77. 

to  prosecute  suits,  73. 

to  support  beneficiary,  69. 

to  repair,  86. 

to  fence,  86. 

to  insure,  86,  122. 

to  pay  taxes,  86. 


EFFECT,  of  disclaimer,  4. 

ELECT,  beneficiary  may  elect  to  pursue  property  or  trustee,  151. 

may  elect  damages  or  property,  142. 
EMBEZZLEMENT,  120. 

EMPLOYMENT,  of  a  person  is  not  trust  property,  82. 
ENCUMBRANCE,  discharge  of  apportioned,  113. 
END,  trusteeship  how  ended,  16,  145. 

of  trust  discharges  trustee,  16. 
ENFORCED,  trust  may  be  where,  140,  155. 
EQUITABLE   ESTATE,  22,  132. 

See  Estate  of  Beneficiary. 
ERRORS,  liability  for,  125. 
ESCHEAT,  of  equitable  estate,  43,  133. 
ESTATE   OF   BENEFICIARY,  incidents,  132. 

alienation  of,  134. 
ESTATE   OF   TRUSTEE,  is  joint,  38. 

cannot  bo  severed,  38. 

passes  to  survivor,  39. 

not  affected  by  statutes  making  tenants  in  common,  89. 

in  real  estate  what  is  needed,  37. 

in  personal  property  absolute,  37. 

in  code  states  no  title,  37. 
ESTOPPEL,  by  receipting  for  securities,  84. 

by  laches,  149. 


172  INDEX. 

EXCHANGE,  power  to,  61. 

EXECUTOR,  may  be  a  trustee  in  fact,  5,  11-12. 

liability  of  bondsmen  for  acts  as  trustee,  5,  12. 

when  he  becomes  a  trustee,  12. 

ends  executorship  and  becomes  trustee  how,  84. 

need  not  accept  trusts  in  same  will,  3,  5. 
EXECUTION,  of  power  must  be  accurate,  50. 

levy  of  does  not  affect  trust  estate,  41. 

trust  property  may  be  taken  for  trust  debts,  41. 

equitable  estate  may  be  taken  on,  134. 
EXECUTOR  OF   TRUSTEE,  may  inherit  trust,  2. 

does  not  take  trust  powers,  46. 

duty  as  to  trust  estate,  46. 

power  to  disclaim  testator's  trusts,  2,  5,  17. 

his  duty  as  to  testator's  trusts,  17. 
EXECUTORY  DEVISE,  sale  of,  56. 
EXEMPTION,  from  furnishing  sureties  on  bond,  10. 

from  liability  by  settlement,  127. 
EXPENSES,  what  are  chargeable  to  income  and  principal,  117. 

what  may  be  charged  to  trust  fund,  29-30. 

of  suit  allowed,  29,  63. 

of  accounting,  30,  80. 

of  protecting  beneficiary,  63. 
EXTINCTION    OF   POWER,  53. 
EXTINCTION  OF  TRUST,  discharges  trustee,  16. 
See  End  of  Trust. 


FARMING  IMPLEMENTS,  may  be  used  by  whom,  108. 

See  Chattels. 
FARMING   STOCK,  increase  usually  income,  108. 

See  Personal  Property. 
FATHER,  see  Parent. 
FENCE,  duty  to,  86. 

cost  charged  to  what,  115. 
FIT.     See  Unfit. 

a  trustee  should  be  fit,  14. 

court  ordinarily  will  only  appoint  a  fit  trustee,  15. 
FOLLOWING,  the  trust  property  into  hands  of  stranger,  150, 
151. 


INDEX.  173 

FOREIGN  INVESTMENTS,  99,  157. 

FOREIGN    REAL    ESTATE,    ancillary    trusteeship    neces- 
sary, 157. 

need  not  be  inventoried,  78,  157. 

rents  from  not  part  of  account,  78,  157. 
FOREIGN    SECURITIES,  improper  investments,  99,  157. 
FOREIGN   TRUSTEE,  appointment  of,  16,  156. 

removal  of,  20,  156. 
FORFEITURE  of  trustee's  estate,  effect  of,  43. 

of  equitable  estates,  133. 
FRAUD,  in  account,  79. 

to  draw  whole  fund  at  once  under  power  to  use  principal  if 
needed,  67. 

what  is  in  sale,  58. 

in  contract  between  trustee  and  beneficiary,  use  of  position 
is  fraud,  72. 

presumption  of  fraud  if  trustee  gets  any  advantage,  71. 

in  execution  of  power,  53. 

beneficiary  liable  for,  125,  154. 

may  be  forced  to  contribute,  125. 

contribution  among  parties  to,  125. 
FURNITURE,  may  be  used  up  when,  108. 

replaced  from  income,  108. 

See  Chattels. 


GAIN  AND  LOSS,  usually  principal,  106. 

on  separate  transactions  not  set  off,  112,  122, 127, 
GENERAL  ASSIGNMENT.     See  Assignment. 
GIFTS,  to  trustee,  29,  72. 

GOOD  FAITH,  required  of  trustee,  1,  27,  72,  73. 
GRAVEL,  when  income,  107. 
GUARDIAN,  of  lunatic  or  infant  trustee,  13, 17. 

payment  to  guardian,  119. 


HEIR  OF  TRUSTEE,  may  have  title  to  trust  estate,  2,  44. 

does  not  take  trustee's  powers,  46. 
HONESTY,  protects  when,  126. 

not  enough  alone,  126. 


174  INDEX. 

HOUSE,  beneficiaries'  right  to  use,  147. 

for  beneficiary  proper  investment,  95. 
HUSBAND,  not  proper  trustee  for  wife,  14. 

may  be  trustee  for  wife,  14. 

IGNORANCE,  court  will  instruct  when,  81. 

of  duties,  no  excuse,  125. 
ILLEGAL   TRUST,  cannot  be  enforced,  141,  155. 
IMPLEMENTS,  may  be  used  by  whom,  108. 

See  Chattels. 
INCAPABLE   TRUSTEE,  when  new  trustee  in  place  of,  7. 
INCIDENTS,  of  legal  estate,  22. 

of  beneficial  estate,  132. 

of  ownership  fall  to  trustee,  23. 
INCOME.     See  Principal  and  Income. 

first  year's  income,  144. 

investment  should  produce,  95. 

what  is  net,  115. 

beneficiary's  right  to,  143. 

for  first  year,  144. 
'  payable  when,  144. 

commissions  on,  31. 

may  be  withheld  to  reimburse  trustee,  144. 

may  be  on  condition,  139. 

anticipation  of.     See  Restraint  on  Alienation. 

accumulated,  becomes  principal,  108. 

may  be  collected  by  one  trustee,  75. 
INCOMPETENCY,  no  excuse,  125. 
INDEMNITY,  trustee  may  require,  64. 
INFANT,  may  be  a  trustee,  13. 

infant  trustee  may  be  removed,  13. 

effect  of  infant's  being  trustee,  13. 

no  conversion  in  trust  for,  92. 

right  to  support.     See  Support. 

payments  to,  70,  119,  125. 

becoming  of  age  should  have  advice,  71,  148, 
INFORMATION,  beneficiary  is  entitled  to,  143. 

strangers  not  entitled  to,  120. 

need  not  give  to  stranger  at  beneficiary's  request,  120,  143. 
INJUNCTION,  breach  of  trust  may  be  enjoined,  141. 
INNOCENT   PURCHASER.     See  Purchaser  for  Value. 
INSANE,  expense  of  suit  to  establish  allowed,  63. 


rNDEX.  175 

mSANE  PERSON.    See  Lunatic. 
INSANE  PERSON,  right  to  support.     See  Support. 
INSOLVENCY.     See  Bankruptcy. 
INSTRUCTIONS,  bill  for  lies  when,  82. 

should  not  be  sought  by  fictitious  account,  82. 

trustee  may  get  when,  81,  82. 

as  to  distribution,  118. 

necessary  parties,  82. 
INSURANCE,  duty  to  insure,  86. 

liable  for  neglect  of,  122. 

premiums  charged  to  whom,  116. 

proceeds,  apportioned  how,  115. 
INTEREST,  charged,  for  not  investing,  93. 

for  breach  of  trust,  142. 

simple  and  compound,  93,  127,  142. 
INTEREST  ON  INVESTMENTS,  apportioned  when,  112. 

on  bonds  bought  at  premium  apportioned,  112. 
INTERESTED,  who  are,  10,  131. 

persons  having  possibility  not,  131. 

holders  of  general  power  of  appointment  not,  131. 

person  who  may  receive  income  at  trustee's  pleasure  not, 
135. 

potential  payee  in  spendthrift  trust,  66,  131,  138. 

person  may  have  trustee  appointed,  141. 
INTER-STATE   LAW,  155. 
INVALID   TRUSTS,  141,  155. 
INVESTMENT,  duty  to  make,  93. 

sound  discretion  must  be  used  in,  99. 

investments,  in  discretion  of  trustee  means  what,  95. 

soundness  determined  by  facts  at  time  of  investing,  99. 

must  produce  income  and  be  safe,  95. 

'What  are  proper,  66. 

English  rule,  96. 

American  rule,  96,  97,  98. 

improper  ones,  98-99. 

proportion  in  one  security,  99. 

gain  on  one  does  not  balance  loss  on  another,  112, 122, 126. 

allowed  in  various  States,  100  to  103. 

should  be  changed  when,  94, 

of  testator,  not  always  to  be  converted,  90-91. 
IRREGULAR  SALE,  aided  when,  58. 

purchaser  takes  risk  of,  59. 


176  INDEX. 

JOINDER,  of  whom  as  parties,  23,  48,  64. 

JOINT,  execution  of  powers  necessary,  48. 

JOINT  BOND,  makes  trustees  liable  for  co-trustee,  123. 

JOINT  TENANTS,  trustees  are,  38. 

beneficiaries  are  not,  132. 

may  be  forced  to  act  jointly,  132. 
JOINT   TRUSTEES,  survivorship,  38,  43,  46. 

must  exercise  trust  jointly,  40,  47,  48. 

liability  joint  and  several,  121,  122. 

must  sue  jointly,  64. 

when  liable  for  co-trustees,  121-129. 

right  to  contribution,  125. 
JUDGMENT,  trustee  must  use  good,  126. 
JURISDICTION,  what  courts  may  appoint  trustees,  8,  155. 

where  trust  can  be  enforced,  140,  155. 

what  court  may  remove  a  trustee,  19,  140. 


LACHES,  rights  of  beneficiary  lost  by,  148,  149. 
LAND,  VACANT,  should  be  converted,  90. 

taxes  on  charged  to  principal,  115. 

See  Real  Estate. 
LANDLORD,  beneficiary  cannot  deny  trustee's  title  as  land- 
lord, 38,  146. 
LEASE,  power  is  general  and  incidental  to  oflSce,  61. 

what  bind  the  estate,  61-62. 

building  lease,  62. 

trustee  is  liable  on  covenants,  25,  63. 
LEASEHOLDS,  improper  investments,  98. 
LEGAL  ESTATE.     See  Estate  op  Trustee. 
LEGAL  EXPENSES,  charged  to  trust  fund,  29,  117. 
LET.     See  Lease. 
LIABILITIES,  to  beneficiary,  121  to  129. 

joint  and  several,  121. 

excused  from  by  trust  instrument,  127. 

for  acts  of  predecessor,  80,  83,  122. 

for  acts  of  co-trustee,  123,  124,  125. 

for  not  investing  in  particular  stock,  94,  128. 

for  neglect  of  duty,  93,  122,  123. 

for  allowing  rent  to  fall  in  arrears,  122. 


INDEX.  177 

LIABILITIES  —  continued. 
for  errors,  126. 

for  use  of  discretionary  power,  69,  126. 
for  care  of  securities,  87,  88,  89. 
for  payment  of  share  to  beneficiary,  IIS. 
for  payment  to  wrong  person,  126. 
for  distribution  of  fund,  117. 
to  strangers,  26,  120. 
trustee  is  liable  as  owner  of  property,  26. 
trustee  is  liable  as  stockholder  in  corporation,  24. 
for  misrepresentations,  84,  120. 
on  contract,  120. 
trustee  liable  on  contract  of  sale  not  enforceable  in  equity, 

59. 
trustee  is  liable  on  covenants  in  deed,  25,  120. 
trustee  on  covenants  in  lease,  25,  63,  120. 
criminally,  121. 

criminal.     See  Criminal  Liability. 
ends  on  death,  122. 
terminated,  129. 

LIABILITIES,  OF  BENEFICIARY,   153. 

for  taxes,  154. 
for  fraud,  154. 
inducing  breach  of  trust,  125,  154. 

LIEN,  beneficiaries  on  trust  property,  149,  150. 
trustee's  for  expenses,  30. 
trustee's  for  his  charges,  120. 
mechanic's  lien  attaches  when,  41. 

LIFE   TENANT  AND   REMAINDERMAN,  for  respective 
rights.     See  Principal  and  Income. 
trustee's  duty  to  in  investing,  95. 

LIMITATIONS,  if  trustee  barred  by  statute  there  is  no  rem- 
edy, 24. 

when  statute  runs  for  trustee,  129,  133,  149. 

statute  runs  after  distribution  or  decree  for,  119. 

statute  of,  discharges  trustee's  liabilities,  129. 

statute  runs  for  breach  of  trust  when,  149. 
LOAN,  on  personal  security  not  proper  investment,  98. 

cannot  loan  trust  funds  to  self,  27,  28,  121. 

or  to  relative  or  partner,  28. 
12 


178  INDEX. 

LOSS;    See  Gain  and  Loss. 

by  breach  of  trust,  principal,  113. 

liability  for,  125,  126. 

of  rights  by  beneficiary,  140,  147,  149. 
LUNATIC,  may  be  a  trustee,  13. 

may  be  removed,  13,  19. 

effect  of  lunatic's  being  trustee,  13. 

expense  of  declaring,  29. 

duty  to,  69,  70. 
LUXURIES,  allowed  when,  68. 


MAINTENANCE,  power  of.    See  Support. 
MAKER  OF   TRUST.     See  Settlor. 
MANAGEMENT  OF   TRUST  PROPERTY,  82. 

See  Table  of  Contents,  pp.  xiv,  xv,  xvi. 
MANAGING   TRUSTEE,  74,  75,  76. 
cannot  exercise  all  powers,  74. 

MARRIED   WOMAN,  status  of,  71. 
settlement  on  self,  139. 
restriction  as  to  income,  136. 

MEASURE  OF  DAMAGES.     See  Damages. 
MECHANIC'S   LIEN,  attaches  to  trust  property  when,  41. 
MINOR.     See  Infant. 

MISMANAGEMENT,  is  cause  for  removal,  19. 
liability  for,  126. 

MISREPRESENTATION,  liability  for,  84,  120. 
MISTAKE,  if  honest,  not  a  cause  for  removal,  21. 

liability  for,  126. 

account  may  be  re-opened  for,  79. 
MONEY,  single  trustee  may  collect,  75. 

can  be  followed,  151. 

care  of,  87. 
MORTGAGE  OF  TRUST  PROPERTY,  not  general  power, 
60. 

power  implied,  60. 

court  will  not  order,  60. 

power  of  sale  does  not  include,  60. 

power  of  sale  mortgage  implied,  61. 


INDEX.  179 


MORTGAGES,  bonds  may  not  be,  95. 

railroad  bonds  not  investment  in,  95. 

second  not  proper  investment,  98. 

margin  of  security,  99-100. 
MOTHER.     See  Parent. 


NEED,  what  is,  67-68. 

court  will  not  control  discretion  as  to,  68. 

drawing  whole  fund  at  once  a  fraud,  69. 
NEGLECT,  to  disclaim  implies  acceptance,  6. 

to  examine,  trust  securities,  89. 

trustee  liable  for,  122. 

to  claim  rights  estops  beneficiary,  149. 
NEGOTIABLE   SECURITIES,  care  of,  88. 
NET  INCOME,  defined,  115. 

ascertained  when,  143. 
NON  RESIDENT  TRUSTEES.    See  Foreign  Trustees. 

may  or  may  not  be  removed,  20. 

will  not  be  appointed  when,  16. 
NOTICE,  to  obligor  of  chose,  should  be  given  when,  85. 

of  prior  equity,  required  when,  134,  135. 

effect  on  priorities  in  equitable  estate,  135. 

what  is,  135. 
NOTICE  OF  TRUST,  what  is,  40,  60,  152. 

word  "  trustee,"  40,  152. 

purchaser  with,  150. 
NUISANCE,  trustee  is  liable  for  nuisance  on  trust  property,  26. 

beneficiary  not  liable  for,  154. 


OFFICE,  expense  of  charged  to  whom,  30. 

OFFICE  OF   TRUSTEE.    See  Trusteeship. 

ONE   TRUSTEE.     See  Single  Trustee. 

OWNERSHIP,  of  trust  property  belongs  to  trustee,  22, 131-132 

of  trust  property  does  not  belong  to  beneficiary,  22. 

in  equity,  considered  to  be  in  beneficiary,  132. 

incidents  of  fall  to  trustee,  23. 

not  beneficial  to  trustee,  26,  27. 


180  INDEX. 

PARENT,  is  unfit  trustee,  14. 

duty  to  support  child,  70. 

support  of  child  may  include  parent,  68,  70. 

payment  to  for  child,  70,  71,  119,  126. 
PARTIES   TO   SUIT,  who  are  necessary,  64. 

beneficiaries  generally  not  necessary  parties,  23. 

are  sometimes,  23. 

to  suit  for  removal,  19. 

to  suit  for  appointment  of  trustee,  8. 

to  bill  for  instructions,  82. 
PARTITIOX,  estate  of  trustees  is  not  subject  to,  38. 

power  to,  61. 
PARTNERSHIP,  improper  investment,  98. 

should  be  converted,  89. 

may  be  authorized  investment,  95. 

profits  partly  principal  when,  105. 
PASSIVE   TRUSTEE,  duty  of,  38. 

none  at  law,  74-75. 
PAYMENT,  by  debtor,  to  single  trustee,  75. 

of  share  to  beneficiary  before  end  of  trust,  118. 

by  mistake  beneficiary  not  required  to  refund,  154. 

to  infant,  70,  119,  125. 

to  attorney,  119. 

to  wrong  person,  117,  119,  125. 

to  wrong  person,  beneficiary  may  recover,  152. 
PERSON,  of  bad  habits  may  be  removed  from  oflSce,  20. 
PERSONS,  who  are  beneficially  interested.     See  Interested. 
PERSONAL,  a  trust  is  a  personal  confidence,  74. 
PERSONAL   LIABILITY.     See  Liability. 
PERSONAL  PROPERTY,  conversion  into  real,  91,  92. 

not  converted  when  meant  to  be  enjoyed  in  specie,  91,  108, 
147. 

taking  possession  of,  84,  85. 

who  entitled  to  possession,  38,  86,  91,  108,  147. 
PERSONAL   REPRESENTATIVES  OF  SOLE  TRUSTEE, 
cannot  disclaim  decedent's  trusts,  2,  17. 

of  deceased  trustee  may  be  invested  with  trust  estate,  2,  17, 
43-44. 

of  deceased  trustee  does  not  succeed  to  trust  powers,  17, 46. 

of  deceased  trustee,  duty  as  to  trust  estate,  17,  46. 
PLEDGE.     See  Mortgage. 
POSSESSION,  of  beneficiary  is  that  of  trustee,  38, 153. 


INDEX.  181 

POSSESSION  OF  PERSONAL  PROPERTY, 

the  taking  of,  84—85. 

who  has  right  to,  38,  86,  147. 
POSSESSION  OF  REAL  ESTATE,  taken  how,  83. 

who  has  right  to,  38,  147. 
POSSESSION   OF   TRUST   PROPERTY,  trustee  is  entitled 
to  at  law,  38. 

beneficiary  may  be  entitled  to  in  equity,  38. 

should  be  taken  at  once,  82-83. 
POSSIBLE  PAYEE,  interested  in  appointment  of  trustee,  10, 
66,  141. 

but  has  no  interest  in  trust,  66,  131,  136,  138. 
POVERTY  OF  TRUSTEE,  not  always  cause  for  removal,  20. 
POWERS,  general  principles,  44. 

incidental  to  the  office  of  trustee,  45-47. 

the  court  can  grant,  45. 

the  legislature  can  grant,  45. 

specially  given  by  the  instrument,  46. 

general  and  special,  vesting  when  and  when  not,  46-47. 

must  be  exercised  by  all  jointly,  47,  48. 

when  lost  by  disclaimer  of  one  trustee,  4. 

exercise  of  discretion  is  essential  part  of,  47. 

execution  must  be  joint,  48. 

exception  as  to  collecting  money,  48. 

to  act  by  agent  or  attorney,  49. 

execution  must  be  exact.  .50 

partial  execution  may  not  exhaust,  49. 

but  may  sometimes,  5-3-54. 

defective  execution  aided  for  purchaser,  50. 

defective  sale  confirmed,  58. 

substantial  execution  aided,  50. 

literal  execution  necessai-y  when,  50. 

court  controls  execution  when,  51,  52. 

execution  set  aside  for  fraud,  52,  53. 

of  single  trustee,  75. 

pass  to  successors,  46. 

and  survivors  when,  46-47. 

of  sole  trustee,  vest  in  successor  not  in  heirs,  46. 

fraud  in  execution  of,  53. 

exhausted  how,  53,  54. 

extinction  of,  50,  53. 


182  INDEX. 

POWERS  —  continued. 

cease  when  trust  is  accomplished,  53. 

liability  for  exceeding,  125. 

not  liable  for  use  of  discretionary,  126. 

of  sale  are  not  incidental,  45. 

of  sale,  55.     See  Sale:. 

of  support,  65-66. 

to  contract,  64. 

of  compromise,  64. 

of  revocation,  69. 

of  arbitration,  64. 

to  lease,  61. 

of  partition,  61. 

to  mortgage  or  pledge,  60,  61. 

of  exchange,  61. 

to  convert  real  into  personal  property,  etc.,  91,  92. 

to  appoint  new  trustee  when,  6,  7. 

to  appoint  trustee  in  whom,  7,  12. 

POWER  OF   APPOINTMENT,  holder  of  is  not  a  benefi- 
ciary, 131. 

if  general  power  exercised  creditors  of  holder  take,  135. 

otherwise  where  power  is  special,  135. 

who  administers  estate  where  general  or  special,  12. 
POWER  OF   ATTORNEY,  payment  on  invalid  power,  119. 

trustee  cannot  give  a  general  one,  49,  76. 

may  give  special  power,  49,  76. 
PREJUDICED   TRUSTEE,  may  be  removed,  20. 
PREMIUM   ON   BOND,  reduced  by  sinking  fund,  112. 

bond  selling  at  not  necessarily  converted,  90. 

purchase   of   bonds   selling   at  premium   and  discount  to 
balance  improper,  112. 
PREMIUMS.     See  Insurance. 
PRINCIPAL   AND  INCOME,   what  is,  104-113. 

importance  of  distinguishing,  104. 

gain  and  loss  on  securities,  106,  113. 

discharge  of  encumbrance,  113. 

accumulated  income,  109. 

timber  and  gravel  are  what,  107. 

farming  stock,  108. 

dividends  are  what,  109-111. 

extra  dividends,  109. 


INDEX.  183 

PRINCIPAL   AND  INCOME  —  conftnuerf. 

stock  dividends,  109-111. 

interest  apportioned  when,  112. 

interest  on  bonds  bought  at  premium,  112. 

repairs,  114. 

alterations  and  additions,  114. 

betterments,  115. 

taxes,  115. 

insurance,  115. 

expenses,  117. 

broker's  charges,  117. 

legal  expenses,  117. 

support  of  beneficiary,  66,  70. 

apportionment  on  conversion,  104. 

apportionment  at  end  of  life  estate,  113. 

right  of  single  trustee  to  handle,  48,  75,  87. 
PRIORITY,  among  transferees  of  equitable  estate,  134. 
PROBATE  COURTS,  proper  place  to  file  disclaimer  under 
will,  3. 

appointment  of  trustee  under  wUl,  7. 
PROFIT,  trustee  cannot  make  profit  from  trust,  28. 
PROMISE,  to  accept  trust  not  binding,  2. 
PROPERTY,  trustee  should  examine,  1,  82,  83. 

what  may  be  trust  property,  82. 

vests  in  trustee  how,  9,  83,  84. 

the  trustee's  estate  in,  37. 

trustee  cannot  take  any  benefit  from,  27. 

ownership  of  trust  property  belongs  to  trustee  not  bene- 
ficiary, 22. 

beneficiary  no  claim  on,  131. 

may  follow  into  hands  of  stranger,  150. 

unproductive  should  be  converted,  89-90. 

but  not  property  to  be  used  in  specie,  91. 

beneficiary's  right  to  possession  of,  38,  86,  91,  108,  147. 

beneficiary's  right  to  conveyance  of,  145-146. 

passes  to  successor  how,  43, 

passes  to  remainderman  how,  42. 

tnistee  cannot  use  trust  property,  27. 

care  and  custody  of,  86. 

of  trust  may  be  taken  for  trust  debts,  41. 

replaced  when,  128. 


184  INDEX. 

PURCHASER,  trustee  cannot  buy  trust  property,  27,  58,  128. 

from  beneficiary,  rights  of,  134. 

must  see  to  application  of  purchase  money  when,  59,  60. 

takes  risks  of  regularity,  59. 
PURCHASER    FOR    VALUE    WITHOUT    NOTICE,  39, 
150. 

who  is  and  is  not,  39-40. 
PURCHASE  MONEY,  purchaser  must  see  to  when,  59,  60. 


REAL  ESTATE,  trustee  takes  only  necessary  title  in,  37. 

title  should  stand  in  joint  names,  38. 

who  entitled  to  possession,  38,  147. 

taking  possession  of,  83. 

unproductive  improper  investment,  98. 

unproductive  should  be  converted,  90. 

duty  to  improve,  86. 

care  and  custody  of,  86. 

repairs  charged  to  what,  114. 

alterations  and  additions  charged  to  principal,  114. 

conversion  into  personal,  91-92. 

foreign,  78,  157. 
REAL  SECURITIES,  what  are,  95. 

railroad  bonds  not,  95. 
:RECEIPT,  must  be  joint  in  equity,  48. 

of  one  trustee,  sufficient  when,  48. 

trustee  bound  by  when,  84. 

liability  for  joining  in,  123,  124. 
■RECEIVER,  appointed  when,  6,  142, 
RECORD,  deed  should  be  recorded,  83. 
REFUND,  beneficiary  need  not,  154. 

beneficiary  disaffirming  sale  must  refund  consideration,  58, 
142. 
REFUSAL  OF  TRUST.     See  Disclaimer. 
REGISTERING  BONDS,  when  proper,  88,  89. 
REGULARITY    OF    TRUSTEE'S    APPOINTMENT,    not 

questioned  when,  16. 
REIMBURSEMENT,  29. 

for  expenses  of  suit,  29,  63. 

for  expenses  of  accounting,  30,  80. 

for  payment  to  beneficiary,  144. 


IXDEX.  185 

RELATION,  is  not  a  fit  trustee,  14. 

RELATIONSHIP,  between  trustee  and  beneficiary,  1,  2,  71. 

RELEASE,  discharges  liabilities,  129. 

by  beneficiary,  147,  148- 
REMAINDERMAN,  title  vests  in  without  conveyance,  42. 

conveyance  to  when,  119. 
REMOVAL,  is  in  discretion  of  court,  19. 

will  remove  for  what,  19-20. 

will  not  remove  for  what,  20-21. 

of  absentee  trustee,  20,  156. 

lunatic  trustee  may  be  removed,  13. 

infant  trustee  may  be  removed,  13. 
RENT,  is  income,  112. 

apportioned  when,  113. 

liable  for  allowing  to  fall  in  arrears,  122. 
REPAIR,  duty  to.  86. 
REPAIRS,  charged  to  what,  114. 
REPRESENTATION,  of  one  trustee  not  binding,  64. 

liability  for  misrepresentation,  84,  120. 
RESIGNATION,  18. 

must  be  accepted  by  all,  18. 

or  by  the  court,  18. 

must  resign  whole  trust,  18. 

may  resign  independent  trusts  under  same  instrument,  19. 
RESTRAINT,  on  alienation,  136-139. 

valid  in  some  States,  137. 

not  valid  in  others,  138. 

married  women,  136 

by  spendthrift  trust,  138. 
RETIREMENT    OF    TRUSTEE.       See    Devestment    of 

Office. 
REVOCATION,   power  of  inserted  in  settlement  in  England 
not  in  America,  69. 

by  using  discretion  to  draw  whole  fund  fraud,  67|  69. 


SAFETY,  a  necessary  feature  of  investment,  9.5. 

SALE  of  contingent  remainders  and  executory  devises,  56. 

power  of  not  incidental  to  office,  54. 

power  usually  specially  g^ven,  54. 

power  of  implied  from  a  given  duty,  55. 


186  INDEX. 

SALE  —  continued. 

power  under  statutes,  55. 

under  cy  pres  doctrine,  56.    , 

may  be  ordered  by  special  law,  56. 

by  order  of  court,  57. 

management  of,  57. 

irregular,  58. 

purchaser  takes  risk  of  regularity  of,  59. 

purchaser's  responsibility  for  purchase  money,  59,  60. 

unauthorized  confirmed  when,  57. 

trustee  cannot  purchase  at,  27,  58,  128. 

cannot  sell  to  relative  or  partner,  27. 

to  trustee,  damages,  128. 

disaffirmed  consideration  must  be  returned,  58,  142. 
SECURITIES,  duty  to  convert  into  trust  investments,  89. 

right  to  possession  of,  147. 

beneficiary  may  examine,  143. 

care  of  negotiable  and  non  negotiable,*88. 

must  not  release,  74. 
SERVICES.     See  Compensation. 

SET  OFF,  trustee  can  not  set  off  private  debts  against  credi- 
tor of  trust,  27. 

by  whom  and  when,  42. 

trustees'  set  off  against  beneficiary,  134,  154.  , 

SETTLEMENT,  should  examine,  1,  83. 

on  self,  peculiarities  of,  135,  139. 
SETTLOR,  may  appoint  unfit  trustee,  15. 

cannot  restrain  self  from  alienation,  139. 
SIGNATURE   "AS   TRUSTEE,"  effect  of,  25,  65,  120. 
SINGLE   TRUSTEE,  may  do  what  alone,  75,  76. 

may  collect  money,  48,  75,  87. 

may  handle  income  not  principal,  75,  87. 

may  be  entrusted  with  securities  when,  87,  88. 

representation  of  not  binding,  64. 

demand  of  sufficient,  64. 
SINKING   FUND,  for  bonds  purchased  at  premium,  112. 
SOLE   TRUSTEE,  on  death  of  trust  vests  in  successor,  43,  44, 
46. 

on  death  of  title  passes  to  whom,  2,  43,  44,  46. 
SOVEREIGN,  may  be  a  trustee,  13. 


INDEX.  187 

SPECIAL   LAW,  sale  under,  56. 
SPECULATION,  with  trust  funds  improper,  27. 
SPECULATIVE,  investments  improper,  99. 

what  are  speculative  investments,  89,  90,  98. 

investments  should  be  coi^verted,  89-90. 

SPENDTHRIFT   TRUSTS,  66,  138. 

interest  of  possible  payees,  66,  131,  138. 

STATUTE,  may  provide  for  sale  of  trust  property,  55,  56. 

of  limitations.     See  Limitations. 
STOCK.     See  Farming  Stock. 
STOCK,  certificate  should  stand  in  joint  names,  85. 

should  indicate  trust  on  their  face,  85. 

as  an  investment,  97,  98. 

dividends  of  belong  to  whom,  109,  110. 

liability  for  transfer  of,  152,  153. 

STOCKHOLDER  IN   CORPORATION,  trustee  is,  24. 
beneficiary  is  not,  24,  154. 
trustee  is  liable  as,  24. 
beneficiary  is  not,  24.  154. 

STRANGER,  property  followed  into  hands  of,  150,  151. 
aiding  in  breach  of  trust  liable,  149,  150,  152,  153. 
cannot  require  information  from  trustee,  143. 
trustee's  liability  to.     See  Liabilities. 

SUBPOENA,  where  had,  140,  155. 

SUCCESSOR,  not  liable  for  acts  of  predecessor,  122. 

should  examine  predecessor's  accounts,  83,  85. 

not  bound  to  receive  property  tendered,  83. 

effect  of  taking  the  property,  128,  129. 

gets  title  how,  10,  43. 

SUIT,  trustee  has  general  power  to  sue  and  defend,  23,  63. 
duty  to  press,  73,  85. 
necessary  parties  to,  23,  64,  82. 
admi.ssions  in  are  binding  when,  64,  132. 
compromi.se  of,  64,  74. 
expense  of  allowed,  63. 
beneficiaries'  rights  in  actions,  2.3-24. 
concerning  trust  property,  131,  153. 
beneficiary  may  sue  or  defend  in  trustee '.s  name,  141,  153. 
against  trustee,  in  what  jurisdiction,  140,  155. 


188  INDEX. 

SUPPORT,  65. 

power  and  duty  to  support  beneficiary,  69,  144. 

when  others  have  duty,  70. 

trustee's  discretion  as  to  quantity,  67,  68,  69. 

when  court  will  review  discretion,  67. 

from  principal  and  income,  66,  67. 

how  apportioned  among  beneficiaries,  68. 

special  power  often  given,  66. 

usually  discretionary,  66. 

possible  recipient  not  interested  in  trust,  66. 

of  beneficiary  or  family  in  spendthrift  trusts,  138. 
SURETIES,  may  be  required  on  trustee's  bond,  10. 

on  bonds  of  executor,  liable  for  acts  as  trustee  when,  5,  12. 

expense  of  surety  company  allowed,  29. 
SURVIVING    TRUSTEE,  office  passes  to  survivors,  38. 

takes  title  on  death  of  trustee,  43. 


TAXES,  duty  to  pay,  86. 

trustee  is  personally  liable,  25. 

where  taxes  are  payable,  25,  158, 

beneficiary  may  be  liable  for,  154. 

how  apportioned,  principal  or  income,  115. 
TENANT,  should  attorn  to  new  trustee,  84. 
TENANTS   IN    COMMON,  trustees  are  not,  38. 
TEMPORARY   TRUSTEE,  appointed  when,  6. 
TERM,  of  lease  trustee  may  grant,  61,  62,  63. 
TERMINATION   OF   TRUST,  16. 

by  conveyance  to  beneficiary,  145,  146. 

commissions  on,  32,  119. 
THINCxS,  trusts  for,  130. 
TIMBER,' when  income  or  principal,  107. 
TITLE,  trustee  takes  absolute  to  personal  property,  37. 

trustee  takes  none  in  code  States,  37. 

trustee  takes  what  estate  is  necessary  in  real  estate,  37. 

to  property  should  stand  in  joint  names,  83,  85. 

vests  in  others,  on  disclaimer  of  one,  4. 

to  property  necessary  to  complete  appointment,  9. 

may  vest  by  provisions  of  settlement,  9. 

decree  for  convevance  to  new  trustee.  10.  83. 


INDEX.  189 

TITLE  —  continued. 

may  vest  in  new  trustee  by  statute,  10. 

to  property,  how  it  passes  to  successor,  10,  43. 

passes  to  remainderman  how,  42,  119. 
TORT,  beneficiary  not  liable  in,  154. 

trustee  liable  iu  tort,  26,  120. 
TRACING,  trust  property  into  hands  of  stranger,  150,  151. 
TRANSFER.  OF   PROPERTY,  to  new  trustee,  9,  10,  84. 

to  remainderman.     See  Remaindkkman. 
TRANSFER  OF  STOCK,  liability  for,  152,  153. 
TRANSFER  OF  TRUST  PROPERTY.     See  Alienation. 
TRANSMISSION  OF  ESTATE,  on  death  of  trustee.     See 

"  Death." 
TRUST,  differs  from  agency,  23. 

may  be  refused.     See  Disclaimer. 

will  not  fail  for  want  of  trustee,  6. 

cannot  be  delegated,  74. 

enforced  where,  140,  155. 
TRUST   COMPANY,  may  be  a  trustee,  13. 

advantages  and  disadvantages  of,  15. 
TRUST   PROPERTY.     See  Property. 
TRUST   TERMINATED,  16,  145,  146. 
TRUSTEE,  can  refuse.     See  Disclaim. 

cannot  abandon  trust,  17. 

may  resign.     See  Resignation. 

removal  of.     See  Removal. 

temporary  trustee  may  be  appointed,  6. 

appointment  of.     See  Appointment. 

executor  performing  such  duties  is  a  trustee,  11. 

any  per.son  intermeddling  is  trustee,  11. 

who  of  two  sets  of  trustees  is  entitled  to  act,  12. 

who  can  be,  13-15. 

should  be  capable,  13. 

who  is  unfit  to  be,  14. 

must  exercise  trust  himself,  48.  49,  74. 

managing  and  passive  trustees,  74-75,  76. 

is  owner  of  trust  property,  22-23. 

the  estate  of.     See  Estate  and  Title. 

right  to  possession  of  property.     See  Possession. 

can  take  no  benefit  from  ownership,  20-27. 


190  INDEX. 

TRUSTEE  — continued. 

cannot  purchase  at  sale,  27,  58,  128. 

good  faith  required,  72,  73. 

cannot  have  adverse  interest,  73. 

contracts  with  beneficiary,  71,  72. 

gifts  from  beneficiary,  72. 

may  act  as  counsel,  attorney  or  broker  when,  28,  72. 

must  keep  accounts.     See  Accounts. 

powers.     See  Table  of  Contknts,  pp.  xi,  xii. 

duties.     See  Table  op  Contents,  pp.  xiii  to  xvi. 

compensation.     See  Compensation. 

his  expenses.     See  Expenses. 

liabilities.     See  Liabilities;   also  Table   of    Contents, 
p.  xvi. 

may  get  instructions  of  court.     See  Instructions. 

single  trustee  may  do  what.     See  Single  Trustee. 

death  of.    See  Death  and  Executor. 

is  discharged  how,  16-21. 
"  TRUSTEE,"  on  certificate  is  notice,  40,  152. 
TRUSTEE,  signature  "  as  trustee  "  effect,  25,  65,  120. 
TRUSTEESHIP,  not  always  desirable,  1. 

is  a  relationship,  1 ,  69. 

not  an  agency,  1,  23. 

is  a  personal  confidence,  74. 

See  Delegate. 

cannot  be  abandoned,  17. 

may  be  resigned,  when  and  how,  17,  18. 

removal  from  when,  19-21. 

passes  to  whom.     See  Successor  and  Death. 

may  be  ended  how,  19-21,  145. 


UNAUTHORIZED   SALE,  confirmed  when,  57. 
UNDIVIDED  PROPERTY,  should  be  converted,  90. 
UNDUE   INFLUENCE.     See  Fraud. 
UNFAITHFUL   TRUSTEE,  may  lose  compensation,  32. 
UNFIT   TRUSTEE,  when  new  trustee  in  place  of,  7. 

who  is  unfit  to  be  a  trustee,  14. 

may  be  appointed  by  creator  of  trusty  15. 
UNFRIENDLY  TRUSTEE,  may  be  removed,  20. 


INDEX.  191 

UNPRODUCTIVE  PROPERTY,  should  be  converted,  89-90. 

converted,  is  partly  income,  105. 
USE,  beneficiary's  right  to  use  trust  property,  38,  86,  91,  108, 
147. 

trustee  cannot  use,  27. 


VACANT  LAND,  should  be  converted,  90. 

taxes  on  how  chargeable,  115. 
VESTING  OF  TITLE  TO   PROPERTY.    See  Title. 
VOTE,  beneficiary  not  qualified  to  as  owner,  132. 

trustee  votes  as  stockhr  jder,  24. 

trustee  enjoined  from  voting  against  beneficiary's  interest, 
142. 


WASTE,  cause  for  removal  of  trustee,  19. 

WASTING  INVESTMENT,  dividends  on  apportioned,  109. 

should  be  converted,  90. 
WIFE,  may  be  trustee  for  husband,  14. 
WILFUL  BREACH   OF  TRUST,  cause  for  removal,  19. 


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UMVERST-""  OF  CALIFORNIA 

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UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 

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